Māori Trustee Annual Report · Statement of Trust Monies 60 Notes to the Financial Statements 61. E.37 MĀORI TRUSTEE. ANNUAL REPORT 2018 1. ... details are held ... This is an important

Māori Trustee

Annual Report 2018

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ContentsForeword 4

From the Māori Trustee 5

Case Studies 10

Our Organisation 26

Our Performance 29

Statement of Responsibility 30

Independent Auditor’s Report 31

Statement of Service Performance 34

Our Financial Statements 55

Statement of Comprehensive Revenue and Expenses 56

Statement of Changes in Net Assets/Equity 57

Statement of Financial Position 58

Statement of Cash Flows 59

Statement of Trust Monies 60

Notes to the Financial Statements 61

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MĀORI TRUSTEE ANNUAL REPORT 2018 1

Our vision is clear

To mobilise Māori land and assets to create this generation’s legacy.

Utaina te waka, hāpainga ko te hoe, kia tuputupu te whai oranga.

91,861Number of hectares under management

97,131Number of owner accounts maintained

237,578Number of ownership interests

1,838Number of trusts and other entities under administration

MĀORI TRUSTEE ANNUAL REPORT 20182

$109.3millionClient funds under management (market value)

$163.4millionMāori Trustee equity

62%of beneficial owners for whom contact details are held

124Number of staff

5Number of offices


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ForewordKi te Minita Whanaketanga Māori

He hōnore ki ahau te tuku atu i te pūrongo ā tau o Te Kaitiaki Māori mō te tau i mutu i te 31 o Māehe 2018.

To the Minister for Māori Development

I’m honoured to present the Annual Report for the Māori Trustee for the year ended 31 March 2018.

Jamie Tuuta Māori Trustee 31 July 2018


This report has been prepared to meet the requirements of section 150 of the Crown Entities Act 2004.

https://www.youtube.com/playlist?list=PL-MEf5oBfuw5QDd0Ej3PXMOJp4kUee4du


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From the Māori TrusteeOur organisation has achieved incredible milestones in the past year – from breaking ground on new kiwifruit orchards, to developing programmes to grow governance skills in our future leaders.

But the things I’m most proud of aren’t always the high-profile stories. While many of our achievements go unnoticed by the clients we serve, they’re at the heart of our vision to protect and enhance their land – for now and for generations to come.

In this annual report owners and trustees, in their own words, speak about their connection to the whenua through the services we provide. Alongside this, we’ve talked to members of our

staff about the passion and commitment they bring to achieving our vision. These stories highlight how strong advocates at every level of our organisation are putting owners at the heart of our mahi.

There’s a clear connection between our high-level strategic direction and what’s happening everyday on the ground. We have an organisation of initiators and leaders, and it’s because of this care, commitment and compassion that we’ve been able to deliver on our promises.

There’s an increased need for innovation to enhance Māori land utilisation. This is an important factor in helping to grow the New Zealand economy, support regional economic development and contribute to the creation of new opportunities for our communities.

As responsible trustees, we have to balance individual needs with the needs and aspirations of the wider ownership base. It takes courage to make bold decisions, and a firm grounding in robust data to deliver our core trustee duties. Our partnerships and collaborations with organisations like AgResearch bring rigour to our decision-making. We’ve developed tailored processes to increase owner participation, and with our land analysis Taikura Nuku model, which combines multiple data sets to identify productivity potential, we’re changing the perception of Māori land.

While our administrative responsibilities are important, the duties and obligations of trustees are substantially wider than the administrative tasks we perform. Our strategic priority of delivery of trustee duties has led to process innovations in how we manage our property portfolio; significant

investments in our information technology (IT); and increasing levels of client satisfaction with our management of land and assets.1

The most significant stream of work this year has been our kiwifruit mobilisation programme. We’re investing in turning semi-productive and unproductive land into high-performance grower businesses that will one day transfer to the landowners. We’ve started on the construction of three orchards, with more in the pipeline over the next year. This programme is a culmination of multiple threads of work that we’ve been progressing. Taikura Nuku helped us to locate prime kiwifruit land, the Poutama engagement process supports owners to seize the opportunity, and our internal business processes gave confidence in our investment decisions.

When we help owners to connect to their whenua, we’re also maintaining the links between the past and the future. Our register of owners is one of our most valuable assets because it captures and tells the stories of owners across generations. We look after the ownership records of nearly 100,000 people. Our registry team is dedicated to maintaining the accuracy of these records, completing over 55,000 updates a year. Every conversation they have, and every update they make, is strengthening owners’ bond with their land.

1 Client Satisfaction Survey 2018 conducted by UMR.

Supported enterprises The kiwifruit orchards we support are exhibiting strong production. We’re proud to have celebrated a number of performance milestones and to be recognised within the industry for our record harvests.

We’re also pleased to report that, after several seasons of depressed markets our dairy portfolio has also outperformed targets for the year.

For the sheep and beef enterprise we support, we’ve seen the predicted positive results coming through from selling stock and careful cost management.

We’re closely monitoring the mānuka plantation established this year. Our survival survey results have been better than expected and there has been negligible attrition due to pest incursion. This is a fantastic result and we’ll continue to monitor ongoing establishment of the plants.

ConnectingToday’s Māori landowners are better informed, more comfortable with technology and are increasingly connected with their whenua.By increasing our investment in digital communications, and exploring how we can blend mapping software, drone footage, 3D video and interactive virtual reality, we’re hoping to further facilitate owners’ connection with their land.

Technology changes quickly and it rapidly becomes more affordable. How we adopt emerging technology to deliver our core trustee duties is fundamental to shaping our future strategy. We’ve trialled Skype clinics for overseas clients, invested in 3D video drone footage and enhanced our mapping capability. We’re creating a bank of resources for the future, so that we’re ready to take advantage of opportunities as new technologies emerge.

“It’s important to keep my ties with the land and

in touch with my heritage. I’m grateful for social

media and the internet. It allows me access to my

whānau back home and my roots.”Mizpah Vanstone – Māori landowner living in Canada


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EmpoweringThis year, My Whenua, our web portal that gives landowners access to everything they need to know about their land, became our largest digital communications channel. More owners are now registered for the service than follow us on Facebook and Twitter combined.

We’ve adopted practices across the organisation to increase the tailored content available on the site from every part of our business. It’s becoming a one-stop-shop for owners wanting more information about what’s happening on their land.

This means, that on average every month 876 people log in, download 544 documents and view over 17,059 pages of information.

Now that My Whenua has an established user-base, we’re going to develop the site to make it more interactive. We’re working towards building active, supportive digital communities that any owner can participate in.

Looking ahead We’re looking ahead to future Te Ture Whenua Maori Act 1993 reforms. As leaders in land management and trustee services, we’re ensuring that owners and trustees are prepared for a changing legislative environment.

Our focus on providing education and training is extending beyond the classroom. To complement our formal courses, we’ve developed an associate advisors programme for the next generation of trustees to gain valuable experience around the board table. Alongside this, our communications strategy is focused on increasing the amount of information about land management available, so that people can access information in their own time, and at a pace that they’re comfortable with.

We have a leading role in helping people to understand the management and governance of their whenua. We see any reform as an opportunity for us to engage more owners in decision-making for their whenua.

We understand the important place whenua has for Māori. By nurturing relationships with our people, we’re ensuring owners are informed, connected and empowered to make decisions about their land – developing a legacy for this generation and the next.


Māori Trustee Outcomes Framework

Vision Statement

Mobilising Māori land and assets to create this generation’s legacy

Supporting government priorities

Assisting Māori landowners in making decisions and acting on them

Achieving fuller and more effective utilisation of Māori land

Impact statements

Engagement with owners to build:

» Connection with the land

» Participation in decision-making

» Governance capability

» Management capability

Modelling governance that:

» Strengthens formal governance arrangements

» Protects Māori land for future generations

Growth in returns through:

» Owner-led improvements in land utilisation

» Achieving social, cultural, economic and environmental returns

» Increasing the number of enterprises on the land

» Providing enablement funding


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2 EBITDA = Earnings before interest, tax, depreciation and amortisation.


Services

» Trust Services

» Registry

» Governance Development

» Property Management

» Common Fund Management

» Land Development

» Business Support

» Enablement Funding

Benefits

» Lifting owner capability for governance roles

» Improved confidence and satisfaction with governance arrangements and asset utilisation

» Land shifting from passive leasing to active enterprises

» Increased owner free cash flow

Measurement

» Number of owners as active trustees

» Number of owners certified in governance

» Customer satisfaction

» Number of successful projects

» Growth in Common Fund revenue

» EBITDA2 from Common Funds

» Value of General Purposes Fund invested in Māori land


Case study:

History and future connecting


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To help owners stay connected with their whenua, it’s important that we keep our records accurate and up to date. Our registry team looks after the contact records of hundreds of thousands of people.

Maree Matheson, Registry Services Advisor at Te Tumu Paeroa, says “the owners’ register is extremely important. The register affects everything for our clients – their ownership, their distributions, their ability to vote at meetings. We need to make sure everything’s up to date so our clients have faith in us and the mahi we do.”

Becoming an owner can be a difficult experience for people. The succession process can be confusing, intimidating, and it often comes at a time of grief. It’s at this time that many owners have their first interaction with Te Tumu Paeroa, through our registry team.

“Owners often come to us when they’re going

through a really difficult time. They can be

dealing with grief, funeral or unveiling costs, and

other family issues when they go through that

succession process,” says Maree.

“It’s important that we take the time to help them understand the succession process as well as our own processes following a succession. It’s a lot easier for them when they get that understanding.”

“When they get that feeling of relief, you can hear it through the phone. They’re so grateful someone’s taken the time to help them! That’s one of the best parts of the job!”

Joe Hawkins is a Māori landowner living in Hastings, with whenua in the Rotorua area. He’s helped his whānau through the succession process and with updating their details. Maree was involved in helping him with this process.

“Working through with Maree was quite straightforward. I had most of the [whānau] information already. It was just a matter of tidying up their emails, phone numbers and addresses,” says Joe.

“When I got onto Maree, I tell you what – it moved. She dealt with me one on one and we tidied it up.”

Joe has a strong connection to the land. By helping his whānau maintain that connection, he hopes to see the next generation continue to carry this taonga tuku iho.

I’m not in it for the pūtea.

It’s mainly for the younger

generation coming through.

“I’m not in it for the pūtea. It’s mainly for the younger generation coming through. I’ve got a granddaughter who I’ll probably be passing [my land] down to. I also just spent time with my niece. I put her on the website and showed her the land. She was quite amazed! She couldn’t believe it when she saw it,” says Joe.

“I’m enjoying my retirement now. And I’ve tidied all this up. It’s up to a few young ones to get up there and learn about this side of their culture!”

CONNECTING THE NOW AND THEN


https://youtu.be/VtWdigiEutI


“I’m enjoying my retirement now.

And I’ve tidied all this up.

It’s up to a few young ones to get up there and learn about

this side of their culture!”— Joe Hawkins, Māori landowner Hastings


Case study:

Fences, roads, homes and

communitiesMĀORI TRUSTEE ANNUAL REPORT 201814


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Carol Kingham has been working for us for over 25 years. In her role as a property officer, based in Rotorua, she’s developed strong relationships with tenants and these relationships bring benefits to Māori landowners.

“We want to help owners leave a legacy for the next generation. We do that by engaging with really good tenants who improve the land that’s in their care,” says Carol.

Developing and maintaining lasting relationships with tenants has led to long-term benefits for owners, not just in terms of pūtea, but for the protection of the whenua.

“There have been a lot of tenants I’ve been working with the whole time I’ve been here. Situations where the tenants have been leasing the land long term because the owners are happy with their management of the whenua. It’s those relationships that stand out the most.”

It’s important that owners know their whenua is being well looked after. Our management of the property and the lease is an important step in

ensuring that and is also a major motivating factor for Carol in her work.

“If I can work with a tenant towards an agreement that results in a really good deal for the landowners, then that’s a good day,” says Carol.

“When tenants maintain the improvements, fertilise the land, and look after the animals. Or if it’s an orchard or cropping, making sure everything’s done to the best farming practices possible. It’s great when we get a good tenant who looks after the whenua as if it’s their own.”

Heather McPhee is an owner of Māori farmland in the Taranaki area. While she now lives on the Coromandel Peninsula, her whenua has always been a major factor in her life. Even though she lives away from the whenua, knowing that the people who lease and work the land are taking care of it is vital.

“I grew up on it. My childhood was spent on that land, on the marae, and with my grandparents, mother and uncles,” says Heather.

…create something for our

whānau to go back to.

To be able to rekindle the

stories, the marae and the land.


CONNECTING YOU AND THE WHENUA

The value Heather places on the land doesn’t stem from its potential to provide a pūtea for owners. It comes from how it connects her to the past and the future.

“To me, the land is a beautiful connection to my ancestors, so I feel very strongly about it. We go through life and all, of a sudden, we have this acquisition that we’ve got through the passing of a parent. I’m a genealogist, so I study whakapapa – but this was a whole new ball game!”

“I went on a personal journey to discover the roots of everything, so I have a better understanding of where the connection came from.”

Heather’s also determined that future generations understand their connection to the whenua, and for the whenua to continue being a special part of their lives.

“I connected lots of other whānau to the land. I created a little history booklet for my family and my sibling’s family. And now they’re on the same page and it’s not a mystery,” says Heather.

“The vision I have is to create something for our whānau to go back to. To be able to rekindle the stories, the marae and the land. For people to go home and participate in life there.”

“I went on a personal journey to discover the roots of everything.

I have a better understanding of where the connection came from.”

— Heather McPhee, Taranaki landowner and trustee

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Case study:

Overcoming the distance that keeps us apart



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Selfoss is a small town that sits on the banks of Ölfusá River in Iceland. It’s not the first place you’d imagine finding an owner of Māori land. But it’s where you’ll find Waimate-born Gary Te Maiharoa.

“Living in Iceland was the result of the typical young Kiwi OE adventure,” says Gary.

“My roots are to the Waitaki and surrounding area and our Waihao marae.”

But now Iceland is the place Gary lives with his wife Johanna.

Like for many Māori, Gary’s connection to his whānau and whenua hasn’t diminished despite him living so far away.

“I have a large extended whānau in New Zealand. For Māori living abroad, so far away – of course it’s hard. Especially when circumstances lead to a long

and virtually permanent absence from dearly loved whānau and our precious Māori culture,” says Gary.

Gary is one of the many Māori landowners who’ve made use of our online portal – My Whenua.

“My Whenua is great. It’s excellent to be able to see all the information about the land. It’s useful and keeps me informed on all matters involving it,” says Gary.

“I don’t know how to explain the feeling I have when I think of my land. It’s so important and precious to have this connection and it’s not about money. It’s something within that draws me to it. The desire to uphold the respect for our land that our ancestors held, and their values.”

Technology is creating new possibilities for Māori landowners. Because of that, it’s possible for owners like Gary to maintain a connection to their land on the other side of the world using

“For Māori living abroad, so far away – of course it’s hard.

Especially when circumstances lead to a long and virtually permanent absence from dearly loved whānau and our precious Māori culture.”

— Gary Te Maiharoa, Iceland.


CONNECTING THE HERE AND THERE

My Whenua. But with a world increasingly focused on digital delivery, there come different risks.

“The area that most New Zealanders focus on is security and privacy. And for the IT team, that’s primary to us,” says Information Technology Manager Mark Harris.

Information, such as owner addresses, contact details and whānau connections, is an asset to the trust, and it’s important we protect that data for future generations of owners.

“We’re constantly mindful of that. From the point of view of a trustee – that’s one of the core aspects of forming a trusting relationship with owners and trusts. And we take it very seriously,” says Mark.

Jason Osman, Senior Systems Administrator for the IT team, says “the ability to recover systems is also a big thing. Through testing, we can say with confidence that we can restore our systems in the event of a major disaster. That also gives owners the reassurance that we can protect their information.”

Like Gary in Iceland, Jason understands the importance of his whānau connection to the land. Part of his job motivation stems from his desire to help his family maintain that link.

“For me, it’s because of my mum. She’s lived away from her whenua for most of her life. She’s physically not going to be able to go back and set foot on the land. But we can connect her to the whenua using the tools we have available. She can sit in front of the screen, look at the details and be in awe,” says Jason.

“The whole ideology of Te Tumu Paeroa connects to my core values. Even though IT aren’t working directly at the owner level, the work I’m doing behind the scenes is providing the environment to connect with owners. It’s fantastic.”

“For me, it’s because of my mum.

She’s lived away from her whenua for most of her life.

She’s physically not going to be able to go back and set foot on the land.

But we can connect her to the whenua using the tools we have available.”

— Jason Osman, Te Tumu Paeroa IT team


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Case study:

Relationships


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Jessica Smith, Business Relationship Team Manager, has a clear understanding of her role with Te Tumu Paeroa and its purpose.

“I’m passionate about people and I’m passionate about the land. So for me, it’s about building whānau enterprises on whānau land.”

The business relationship team, led by Jessica, works with a number of Māori trusts to understand their aspirations and help guide them towards developing the land in line with those aspirations. This work can be challenging, but it’s vital in helping them reach their goals.

“All challenges are good because they’re all learnings. The thing that helps us get through those challenging situations is the relationships we have; the relationships we’ve gained over the years as we’ve been working in a variety of areas,” says Jessica.

Through these strong relationships, we balance the economic needs, with the cultural, social and environmental needs. “We can have conversations

with owners and trustees who can help give us insight. And they trust and respect the information we share with them.”

Recently, the business relationship team has been working with several trusts in the Bay of Plenty and Gisborne area helping them develop kiwifruit orchards on the whenua. But this important work goes far beyond the development of the land.

“It’s about the wrap-around services too. Being able to provide them with good services and good support so they’re able to do the mahi they want to do. When working with our people, you get a good sense that it’s about creating a legacy for the next generation. Ultimately, our people want to be good kaitiaki,” says Jessica.

“So it’s about providing opportunities for our people and ensuring that we’re protecting the land for this generation and the next.”

Heather McPhee is a passionate owner and trustee for her whenua. She’s led the way with her trust, developing a long-term plan alongside

I’m passionate about people

and I’m passionate about the land.


CONNECTING ME AND YOU

fellow owners. One of the trust’s goals is to create an income from the whenua to help build a papakāinga for owners to return to.

“That’s what we’re striving to do. Getting other landowners to come in and create this vision. That’s what our working group meetings have been about. To spread the word and do something positive,” says Heather.

A recent meeting held in Taranaki gave Heather an indication that the hard work was paying off.

“One thing that blew me away recently was, that for years I’ve gone back to Taranaki for these meetings. And one day I turned up to a meeting and I thought there was a tangi on! There were so many cars. It was unbelievable! But it was actually people who came to listen and to participate.

If you can start the wheels turning and create that, then that’s success in my eyes.”

For Heather, a major factor in reaching this point has been working with Te Tumu Paeroa.

“Without their support and their knowledge, it wouldn’t be where it is today. There are people just as passionate within Te Tumu Paeroa who work in different fields and have these wonderful skills,” says Heather.

“Together, we’ve achieved something wonderful.”

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“That’s what we’re striving to do.

Getting other landowners to come in and create this vision.

That’s what our working group meetings have been about.

To spread the word and do something positive.”

— Heather McPhee, Taranaki landowner and trustee


Our Organisation

Leadership Te mana | Integrity Te tika me te pono | Courage Te maia | Vitality Te hiringa | Inspiration Te hihikoThe Māori Trustee is appointed by the Minister for Māori Development under the Māori Trustee Act 1953. The current Māori Trustee is Jamie Tuuta, who was appointed for a five-year term in August 2011. His term was extended for a further two years in 2016.

Te Tumu Paeroa is the organisation that supports the Māori Trustee to carry out his duties, functions and responsibilities.

Senior Management TeamTe Tumu Paeroa is led by the Senior Management Team. The members are:

Māori Trustee Jamie Tuuta

Chief Operating Officer Nick McKissackOn 27 June 2018, Nick McKissack resigned as Chief Operating Officer.

General Manager Trusts Basil Tapuke

Chief Financial Officer Stuart Allan


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Advisory BoardThe Māori Trustee Advisory Board offers advice and guidance to the Senior Management Team. The members are:

Keith Sutton

Mark Tume

Bill Wilson

CommitteesSpecialist committees support the organisation’s work.

Audit and Risk CommitteeProvides insight and independent advice to ensure robust internal control systems and the management of risk across the organisation to improve its risk management and organisational performance. The members of the committee are Pat Waite (Chair), Kirsten Patterson and Tracey Hook.

Investment and Credit CommitteeMonitors the investment portfolio to ensure the best return on the Common Fund and General Purposes Fund while maintaining an acceptable level of risk for the organisation. The independent members of this committee are Mark Tume (Chair) and Keith Sutton.

StaffWith our head office based in Wellington, we have a solid foundation of 124 staff based across five main offices throughout New Zealand, giving us reach across the different rohe. Our team includes but isn’t limited to specialists in relationship and trust management, law, property management, owner engagement, land development

opportunities and communications. All team members help us to deliver services to owners that support both our strategy and key compliance activities. These teams and others are supported in turn by a number of internally facing teams including information management, registry and owner services and finance.


A great place to workAs at 31 March 2018, we had a team consisting of 95 permanent staff, as well as 29 staff on fixed term, casual or contractor agreements. Our staff numbers have increased by 10 on last year as we continue to build capability in-house to help deliver on various external initiatives, in addition to our core compliance obligations, including the kiwifruit and honey mahi.

We ran our staff engagement survey through a new provider this year, to give a better feedback experience for staff. The new survey showed a good level of engagement overall, which we continue to support by encouraging managers to have good kōrero with their staff about any issues and feedback that can be passed on to our senior management team.

Once again, the incredible passion and drive our staff have for helping owners achieve their visions and aspirations, shone through. This is one of the things they love most about working here. In addition to this, the reason that our staff said they loved working for us was again he tangata, he tangata, he tangata – the people – both internally and externally.

During the past year, our staff have had access to a number of different training opportunities, either based around their mahi or allowing them to further develop their skills to help them look to the future. We’re also happy to report the continuation of our internal recognition programme – Te Tohu Manahau – which sees us nominate and celebrate an individual and team who live and breathe our values and strategy in their mahi.

We continue to support flexible working arrangements for our staff, to enable them to maintain the best work-life balance possible and to make sure they spend ever-valuable time with their whānau.

We continue to be committed to our health and safety obligations and have a large number of our Te Tumu Paeroa whānau qualified as first aiders, able to help in an emergency, either on site in the office or out at hui.


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Section:

Our Performance



Statement of ResponsibilityFor the year ended 31 March 2018

In terms of the Crown Entities Act 2004, the Māori Trustee is responsible for the preparation of financial statements, the Statement of Service Performance and the Statement of Trust Monies and for the judgements made in them.

The Māori Trustee is responsible for any end-of-year performance information provided under section 19A of the Public Finance Act 1989.

The Māori Trustee is responsible for the establishment and maintenance of internal control systems to provide reasonable assurance as to the integrity and reliability of financial reporting.

In the Māori Trustee’s opinion, these financial statements, the Statement of Service Performance and the Statement of Trust Monies for the year ended 31 March 2018, set out on pages 34 to 94, fairly reflect the financial position and operations of the Māori Trustee.

Jamie Tuuta Māori Trustee 31 July 2018


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Independent Auditor’s ReportTo the readers of the Māori Trustee and Group’s financial statements and performance information for the year ended 31 March 2018

The Auditor-General is the auditor of Māori Trustee (the Trustee) and Group. The Auditor-General has appointed me, Clint Ramoo, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements and the performance information, including the performance information for an appropriation, consisting of the Māori Trustee and its subsidiaries and other controlled entities (collectively referred to as ‘the Group’) on his behalf.

Opinion

We have audited: » the financial statements of the Trustee and the Group on pages 56 to 94

that comprise the statement of financial position as at 31 March 2018, the statement of comprehensive revenue and expense, statement of changes in net assets/equity, statement of cash flows and statement of trust monies for the year ended on that date and the notes to the financial statements including a summary of significant accounting policies and other explanatory information; and

» the performance information of the Trustee and the Group on pages 9 to 24 and 34 to 54.

In our opinion: » the financial statements of the Trustee and the Group on pages 56 to 94:

› present fairly, in all material respects:

· its financial position as at 31 March 2018; and

· its financial performance and cash flows for the year then ended; and

› comply with generally accepted accounting practice in New Zealand in accordance with the Public Benefit Entity Reporting Standards and

» the performance information on pages 9 to 24 and 34 to 54:

› presents fairly, in all material respects, the Trustee and the Group’s performance for the year ended 31 March 2018, including:

· for each class of reportable outputs:

· its standards of performance achieved as required in the funding agreement with the Minister for Māori Development; and

· its actual revenue and output expenses as compared with the forecasts included in the agreement with the Minister for Māori Development; and

· what has been achieved with the appropriation; and

› complies with generally accepted accounting practice in New Zealand.

Our audit was completed on 31 July 2018. This is the date at which our opinion is expressed.

The basis for our opinion is explained below. In addition, we outline the responsibilities of the Māori Trustee and our responsibilities relating to the financial statements and the performance information, we comment on other information, and we explain our independence.

Basis for our opinion

We carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the Professional and Ethical Standards and the International Standards on Auditing (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Responsibilities of the auditor section of our report.


We have fulfilled our responsibilities in accordance with the Auditor-General’s Auditing Standards.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Māori Trustee for the financial statements and the performance information

The Māori Trustee is responsible on behalf of the Trustee and the Group for preparing financial statements and performance information that are fairly presented and comply with generally accepted accounting practice in New Zealand. The Māori Trustee is responsible for such internal control as it determines is necessary to enable it to prepare financial statements and performance information that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements and the performance information, the Māori Trustee is responsible on behalf of the Trustee and the Group for assessing the Trustee and the Group’s ability to continue as a going concern. The Māori Trustee is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to merge or to terminate the activities of the Trustee and the Group, or there is no realistic alternative but to do so.

The Māori Trustee’s responsibilities arise from the Public Finance Act 1989 and the Māori Trustee Act 1953.

Responsibilities of the auditor for the audit of the financial statements and the performance information

Our objectives are to obtain reasonable assurance about whether the financial statements and the performance information, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit carried out in accordance with the Auditor-General’s Auditing

Standards will always detect a material misstatement when it exists. Misstatements are differences or omissions of amounts or disclosures, and can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of readers, taken on the basis of these financial statements and the performance information.

For the budget information reported in the financial statements and the performance information, our procedures were limited to checking that the information agreed to the Group’s statement of performance expectations.

We did not evaluate the security and controls over the electronic publication of the financial statements and the performance information.

As part of an audit in accordance with the Auditor-General’s Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. Also:

» We identify and assess the risks of material misstatement of the financial statements and the performance information, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

» We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

» We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Māori Trustee.

» We evaluate the appropriateness of the reported performance information within the Group’s framework for reporting its performance.

» We conclude on the appropriateness of the use of the going concern basis of accounting by the Māori Trustee and, based on the audit evidence


E.37

obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trustee and the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements and the performance information or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Trustee and the Group to cease to continue as a going concern.

» We evaluate the overall presentation, structure and content of the financial statements and the performance information, including the disclosures, and whether the financial statements and the performance information represent the underlying transactions and events in a manner that achieves fair presentation.

» We obtain sufficient appropriate audit evidence regarding the financial statements and the performance information of the entities or business activities within the Trustee and the Group to express an opinion on the consolidated financial statements and the consolidated performance information. We are responsible for the direction, supervision and performance of the Trustee and the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Māori Trustee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Our responsibilities arise from the Public Audit Act 2001.

Other information

The Māori Trustee is responsible for the other information. The other information comprises the information included on pages 1 to 8 and 26 to 28, but does not include the financial statements and the performance information, and our auditor’s report thereon.

Our opinion on the financial statements and the performance information does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

In connection with our audit of the financial statements and the performance information, our responsibility is to read the other information. In doing so, we consider whether the other information is materially inconsistent with the financial statements and the performance information or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Independence

We are independent of the Trustee and the Group in accordance with the independence requirements of the Auditor-General’s Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1 (Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board.

Other than the audit, we have no relationship with or interests in the Trustee and the Group.

Clint Ramoo

Audit New Zealand

On behalf of the Auditor-General

Wellington, New Zealand


Statement of Service PerformanceThe Māori Trustee is listed in Schedule 4 of the Public Finance Act 1989 as requiring the preparation of a statement of service performance in compliance with the requirements of the Crown Entities Act 2004.

In a letter dated 5 August 2009, the Minister of Finance, as empowered by section 45N(2) of the Public Finance Act, granted the Māori Trustee the following exemptions from the provisions of the Crown Entities Act:

» An exemption from providing “an assessment against the intentions, measures and standards set out in a statement of intent prepared at the beginning of the financial year”. This exemption recognises that the Maori Trustee is not required, under schedule 4 of the Public Finance Act, to prepare a statement of intent. However, the annual report must provide the information that is necessary to enable an informed assessment to be made of the operations and performance for the financial year.

» An exemption from preparing a statement of service performance “in respect of any class of outputs that is not funded (in whole or in part) by the Crown”. This exemption addresses outputs not directly funded in whole or part by the Crown.

This statement of service performance reports against the outputs stated in the funding agreement between the Minister for Māori Development (on behalf of the Crown) and the Māori Trustee.

The total cost of outputs for the year ended 31 March 2018 is summarised below.

2018

Actual $000

Budget $000

Crown appropriation 11,261 11,261

Trust Services 5,697 6,348

Registry Services 1,735 1,959

Governance Development 1,857 2,077

Property Management 3,217 3,345

Common Fund Management 528 574

Land Development 1,212 1,287

Business Support 1,237 1,309

Enablement Funding 501 601

Total cost allocated 15,984 17,500

Shortfall in Crown Appropriation (4,723) (6,239)

Total expenditure is in excess of the appropriation provided by the Crown to provide Trustee services. This has been the case since 2012. The shortfall is made up from fees charged to trusts and a subsidy

from the General Purposes Fund.


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Scope of appropriation

This appropriation is limited to the purchase of trustee and land management functions from the Māori Trustee.

What’s intended to be achieved with this appropriation?

This appropriation is intended to achieve progress towards Māori sustainably growing and developing their resources.

Performance measures for the Māori Trustee functions

2017/18

Assessment of performance Budgetedstandard

Actual

Meet the performance expectations agreed in the funding agreement between the Minister for Māori Development and the Māori Trustee against the following outputs:

» management of the Common Fund » management of client interests » land management » supporting sustainable development of assets » capability and capacity of the organisation.

95% Referrelevant outputs

Reported progress in the achievement of outputs specified is provided within agreed timeframes and within agreed budgets.

100% 100%


Trust services

Appointment types

Trusts under administration

In our role as the Māori Trustee, we manage land and assets for Māori landowners throughout New Zealand and ensure accountability and oversight for 1,838 (2017 1,858) trusts and entities.

This year, we administered the distribution of $7.91 million on behalf of 535 of these entities (2017 $7.96 million on behalf of 531 entities).

Responsible trustee76% 3%

17%

4%

Other

Agent

Custodian trustee


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Number and value of distributions made by appointment types

In our role as the Māori Trustee, we make payments to owners where the responsible trustees have decided to distribute funds to owners rather than keeping monies for future investment in trust assets. This year, we made 21,257 (2017 20,120) individual payments, totalling

$6.87 million (2017 $6.95 million), either directly to the individual accounts of owners or by transfer to pūtea accounts. Trust distribution payments to owners are normally made in the middle two quarters of the year, but some trusts also distribute at other times.

Responsible trustee

$6,079,286403

Agent

$1,670,465

105

Custodian trustee

$227,935

17

Other

$101,5978


Entity actions

Compliance actions completed and services delivered

We’ve continued to make good progress across our portfolio. We held 537 meetings of owners, completed 287 trust reviews and coordinated 269 meetings of trustees (2017 467 meetings of owners, 225 trust reviews, 240 meetings of trustees).

Although we were slightly below our target for meetings of trustees, we held significantly more meetings of owners. This shows an increasing desire for governance structures that work for owners.

Our annual client satisfaction survey focuses on our three main client contact points: meetings of owners, enquiries and My Whenua.

Nearly 80 percent of owners surveyed who had attended a meeting during the year said they were either satisfied or very satisfied with how the meeting went, and 97 percent said they would attend meetings in the future.

To increase participation and engagement, we continued to deliver electronic meetings of owners

through My Whenua. We’re increasing access to information for owners unable to travel to meetings, and using drone footage of the whenua to support the connection between owners and their land. We’ve produced 262 electronic meetings and feedback is overwhelmingly positive.

-

Meeting of owners DistributionsMeeting of trusteesTrust reviews

Target 17/18

Actual 17/18

2000500 1000 1500


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My Whenua

My Whenua live sites and registered users

We’ve focused on growing the audience for My Whenua, giving owners more access to information than ever before. At 31 March 2018, 6,637 (2017 3,246) owners have signed up to the service, and with over 10,000 logins this year, it now surpasses Facebook as our main channel for communicating with owners about their whenua.

“It’s important to stay connected with the land. This I think more so for my son.

Even though he doesn’t remember his dad, as he was too young, he has that connection with his dad and his land.”

— Carol Rolleston - Responsible trustee for her whānau trust

2,000

1,000

0

10,000

8,000

6,000

4,000

2,000

2,528

850

Mar 16 Mar 17 Sep 17 Dec 17 Mar 18

1,368 1,377 1,384

3,246 3,788 4,537

6,637

1,386

My Whenua registered users

My Whenua live sites

Reg

iste

red

use

rs

Live

sit

es

5,883

1,384

Jun 17


RegistryOwners and shareholding interests

The number of shareholdings increased by 5,134 (2017 5,649) during the year, while the number of owner accounts increased by 1,040 (2017 1,250).

We maintain a register of 97,131 owner accounts. These owners have a total of 237,578 ownership interests. Each year, we set a target for the number of account updates we process. This year, we aimed to process 46,000 updates. We completed 55,633 updates to our register. This is an increase of 20 percent on the previous year.

250,000

200,000

150,000

100,000

5,000

0

March 14

89,144

208,226

March 15

90,910

216,522

March 16

94,841

226,795

March 1796,091

232,444

March 18

97,131

237,578

Target 17/18

99,000

237,000

Number of owner accounts Number of ownership interests


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Addresses held – live owners

Contact status for owners

Maintaining the quality of our contact information for owners is a priority to meet our trustee obligations for reporting, consultation and payment of distributions.

The number of owners that we have contact details for increased to 48,779 (2017 48,046). New owner details are often difficult to find if the Māori Land Court is unable to supply them. To reduce the number of clients we’re unable to contact, we regularly cross-check records against other organisations’ data sources to ensure that we have current postal addresses for clients.

“I don’t know how to explain the feeling I have when I think of my land.

It’s so important and precious to have this connection and it’s not about money.

It’s something within that draws me to it. The desire to uphold the respect for our land that our ancestors held, and their values.”

— Gary Te Maiharoa - Māori land owner and My Whenua user

March 18

0% 10% 20% 30% 40% 50%

No address - account created <5 yrs

Deceased

Live with address

No address - account created >5 yrs


Register maintenance

Every two months, we use the Births, Deaths and Marriages death data to update the status of owner accounts. We receive 5,000 to 6,000 records and, through cross referencing, identify around 45 records a month where the client is deceased.

0

Target 17/18

Actual 17/18

60,000 80,00020,000 40,000

New interests Register updatesNew accounts

Number of clients


E.37

Governance developmentGovernance training delivered

Our governance performance and capability team is successfully delivering financial capability courses to develop governance skills. Te Tumu Whairawa is a flexible, two-day wānanga that aims to empower trustees and owners with the knowledge needed to manage their trusts and finances.

“Knowing nothing to knowing a lot has been awesome. Thoroughly enjoyed it.

Doing it as a whānau was cool. I did it with my sister and my husband.

It was whānau orientated.”

— Feedback from wānanga participant

This year, we also launched an associate advisors pilot programme, providing owners with a pathway to enhance their governance skills by preserving and passing on knowledge from one generation to another. The long-term goal of this programme is to encourage a new generation of owners and beneficial owners to be more actively involved in the mahi of the whenua and in the boardroom.

6052

Target 17/18 Year to date 17/18

0 50 100 150 200 250 300

Training days

Participants210253


Property managementTenancies under management

Residential

Others

14%

8% 21%

2%9%46%

Dairy

Forestry

Horticulture

Pastoral


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1,400

1,200

1,000

800

600

400

200

0

March 14 March 15 March 16 March 17 March 18

Current 31–60 days 61–90 days 90 days+

$0

00

s

50 200 400 500 600 700

New leases Rent reviewsLease renewalsLease expiries

Year to date target 17/18

Actual 17/18

252 264 48 192

233 336 39

100 300 450 550 650250150 350

258

Common fund rental debtors

Property rental arrears have reduced from $804,000 in the previous year to $789,000.

Rental arrears are 4.53 percent (2017 4.59 percent) of gross rental income of $17.4 million (2017 $17.5 million) per annum. Our annual target is to be in a range of 3 to 5 percent of gross rental income, which is an acceptable level for the blocks we manage. We continue to work with Baycorp and other private investigators to reduce arrears, and use court processes where applicable.

Lease actions completed


Vacancies as at March 2018

Occupancy as at March 2018

Our total portfolio is now 1,827 leases, with 233 new leases being established during the year (2017 282). There are 67 (2017 70) vacant blocks classed as unutilised that have not been leased for more than three years due to physical constraints such as size, shape, location, lack of infrastructure or access issues.

Our properties team is now using benchmarks with regional indices for land use type, size and rental. We use these to get the best returns for owners from our land management activities.

However, because 78 percent of the rentals we manage are under 50 hectares, we’re constrained in our ability to lift returns to owners and have limited land development options.

We’ve been working with the Department of Conservation to ensure the mauri of the whenua and native landscape and flora of blocks are being protected for generations to come. We look after 19 blocks with Nga Whenua Rahui kawenata, preserving 2,772 hectares of land.

This year, we launched a project to create asset management plans, to improve how we capture the current state of the land and the assets we look after. These plans describe the current use of the land, identify developments or improvements that could improve the economic returns of the land, and identify upcoming actions to maintain or improve the land and related assets. Through this project we’re also improving how we use our existing technology to support our asset management.

Tenanted

91%3%

1%

2%

3%

Vacant > 3 years

Residential vacant

Unutilised

Vacant < 3 years


E.37

Common Fund managementCommon Fund managed

As of 31 March 2018, the Common Fund held $109.3 million (2017 $106.7 million) of client funds, representing around 130,000 individual accounts along with trust and property accounts. All client accounts in the Common Fund are eligible to receive distributable income, in accordance with the Māori Trustee Act 1953.

Payments made to owners

Any income generated for a trust from the land is held by us in the Common Fund and invested. We can then distribute any income from these investments amongst Common Fund account holders (the landowners) – this is known as “distributable income”. We make a payment to owners’ bank accounts once per year, as long as the amount exceeds our minimum payment threshold (currently $2.00). This year, we were able to make payments totalling $6.87 million to 21,257 clients.

120,000

100,000

80,000

60,000

40,000

20,000

0

Entity accounts Common Fund market valueClient accounts

Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Mar 18

$0

00

s

7.50

7.00

6.50

6.00

5.50

5.00

Client payments ($m) Number of clients

Mar 15 Mar 16 Mar 17 Mar 18

$ m

illio

ns

26,000

25,000

24,000

23,000

22,000

21,000

20,000 N

um

ber

of c

lien

ts


Distributions

An important priority for us is the ongoing maintenance of current bank information to ensure effective distribution to owners. This year, 840 (2017 597) payments, with a value of $141,000 (2017 114,000), were rejected because we held incorrect bank account information. Under section 26 of the Māori Trustee Act 1953, distributable income is paid to all account holders with balances at the end of the month. The total value of distributable income paid to account holders for the year was $3.4 million (2017 $3.4 million).

The management aims of the Common Fund are to:

» generate income for account holders that exceeds interest from short-term deposits with a bank over the same term

» preserve capital credited or deposited, and

» grow the value of account holders’ accounts.

8.20

8.00

7.80

7.60

7.40

7.20

7.00

Distributions ($m) Number of trusts

Mar 15 Mar 16 Mar 17 Mar 18

$ m

illio

ns

660

640

620

600

580

560

540

520

500

480

460

Nu

mb

er o

f tru

sts


E.37

Common Fund income

Common Fund asset allocation

The Common Fund is managed within a Statement of Investment Parameters and Objectives (SIPO) framework that reflects the governing legislation of the Māori Trustee Act 1953 and the Trustee Act 1956. The Investment and Credit Committee approves

the SIPO, including any exceptions. Within this framework, the Māori Trustee takes a conservative approach to investment strategy and selections, with investments restricted to bank deposits and investment-grade bonds.

0% 10% 20% 30% 40% 50% 60%

Target 17/18 Actual 17/18

Other income

Distributable income

Enterprise income

Rental income

15%

11%

11%

10%

19%

25%

55%

54%


Gross performance of common fund

The investment performance of the Common Fund is above the benchmark, producing a rolling 12-month return of 3.33 percent (2017 3.35 percent) as at 31 March 2018, whilst the benchmark 12-month rolling Reserve Bank of New Zealand six-month retail deposit gained marginally to 3.30 percent (2017 3.23 percent). The Common Fund’s returns have remained relatively static over the past two years reflecting the low interest rate environment prevailing in both the New Zealand and world economies. Returns are expected to remain flat for the coming year because there is still no upward inflationary pressure on interest rates.

Common Fund market value

The value of the Common Fund as at March 2018 was $109.3 million, just over 2 percent higher than the previous year. Growth is derived from rent-roll growth, enterprise income from farms, forests and orchards, investment income growth, and decisions by owners and trustees to retain funds in their trusts for potential future development. This year has seen outflows for investment in land development matched by proceeds from forest harvests.

3.50

3.40

3.30

3.20

3.10

3.00

2.90

2.80

Common Fund 12-month rolling return12-month rolling average RBNZ* 6 month deposit rate

Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18

Perc

enta

ge

*RBNZ = Reserve Bank of New Zealand

120

100

80

60

40

20

0

Mar

10

Mar

15

Mar

11

Mar

17

Mar

13

Mar

18

$ m

illio

ns 73.1

89.6

104.4

59.7

Mar

16

Mar

12

Mar

14

85.0

99.7106.7

67.0

109.3


E.37

Land developmentLand development projects

Developments have started for our $30 million kiwifruit investment programme. In December, we’d located water on the first three sites and started consent applications. Water is critical to the success of developing new horticulture enterprises, and we’re pleased to have passed this first milestone.

This year, we’ve focused on data-driven decision-making tools. Our Taikura Nuku model has allowed us to analyse the productivity potential of Māori

land and model scenarios so that owners can be confident in their decision-making for their whenua. We’re also currently embedding our spatial strategy to improve communications with owners about their land’s potential. We’ve seen that geospatial information and its interpretation, through the Taikura Nuku model, has provided a good foundation for the conversation with trustees and landowners.

An extension of this focus has been achieved through our collaborative partnership with AgResearch. The partnership aims to overcome the challenges of the fragmentation and scale of Māori land, and multiple ownership structures. We presented the results from our work with the Araukuku Collective at the Ministry of Business, Innovation and Employment. The project helped owners from a collection of 15 blocks to find ways to increase their returns by modelling different land use options.

0 5 10 15 20 25

Potential opportunities

Projects completedProjects under way

Engagements under way

3Target 17/18

Kiwifruit

Number of land development projects

30 35


Business supportConsolidated businesses under management

Consolidated Enterprise Performance

2017/18

Actual $000

Budget $000

Variance $000

Description

Income 6,575 5,561 1,014

Expenses 4,692 3,783 (909)

Enterprise Surplus/(Deficit) 1,883 1,778 105

We support five kiwifruit, three dairy, one sheep and beef enterprise, and a mānuka plantation.


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Capital projects

Sheep/beef

0 2 8 1064 12 14

Target 17/18

Responsible trustee

Number of enterprises

Kiwifruit OtherDairy

0 2 6 10 14 18

Identified during the year

Projects completedProjects under way

Approved during the year

Target 17/18

Kiwifruit

Number of capital projects

4 8 12 16

Enterprises supported

Once again, our kiwifruit orchards are exhibiting strong production. The capital development of Te Kaha 14B2 orchard has been a success, and we’ve submitted a bid for a G3 gold licence for this extended area.

The Ratima orchard irrigation project is ongoing and we are currently monitoring a new source of water for irrigation viability.

The farming enterprises we support continue to perform well, despite the impacts of market and climate over the year. After a number of seasons of depressed markets, our dairy portfolio has also outperformed target.

At a portfolio level, we’ve achieved a net cash profit for the year of $1.88 million against a target of $1.78 million.


Enablement fundingInvestment funding

We provide investment funding and make applications on behalf of trusts to conduct feasibility studies.

An investment of $15 million has been committed to develop kiwifruit orchards as part of the $30 million investment into developing Māori land. Other investments include $147,000 to develop a mānuka plantation and extend our investment in mānuka honey production through Te Tumu Mīere.

Investment into innovation

Our research into high-performance mānuka plantations is bringing innovation to Māori land. Through our membership in Mānuka Research, we’ve invested in the mānuka plantation programme alongside the Ministry for Primary Industries, with the goal of growing the yield and reliability of supply of medical-grade mānuka honey. The programme sourced seeds from areas that produce high-quality honey, and in October we turned a 53-hectare gully of marginal land, that the owners were keen to retire, into a mānuka plantation.

Partial honey harvest from the 63,000-tree plantation is expected to start in 2020 and the trees will reach full floral maturity around 2023.

0 6,000 10,000 14,000 16,000

Huakiwi

Te Tumu Mīere

Omaio 39

Matakana 9

TTP Mānuka

2,000 12,0008,0004,000

Project budget Actual to date

$000s

Section:

Our Financial Statements

E.37



Statement of Comprehensive Revenue and Expense For the year ended 31 March 2018

Group Parent

Notes

2018Actual

$000

2018Budget

$000

2017Actual

$000

2018Actual

$000

2017Actual

$000

Revenue

Fees and commissions 5,031 5,281 4,758 5,073 4,779

Revenue from Crown 1 11,261 11,261 11,261 11,261 11,261

Interest revenue 4,335 3,175 4,333 4,352 4,409

Farm revenue 1,356 1,515 1,207 - -

Dividends 9 - 16 110 16

Other revenue 572 1,414 524 771 733

Total revenue 2 22,564 22,646 22,099 21,567 21,198

Expenses

Employee benefits 3 9,526 10,103 9,574 9,093 9,145

Depreciation 15 381 216 254 187 167

Amortisation 16 440 526 398 418 380

Restructuring costs - - 35 - 35

Farm and land expenses 4 1,050 1,894 730 - -

Other expenses 5 6,967 7,358 6,636 6,882 7,237

Total operating expenses 18,364 20,097 17,627 16,580 16,964

Net surplus/(deficit) from operations 4,200 2,549 4,472 4,987 4,234

Other gains/(losses)

Reversal of impairment - - 4 - 4

Impairment of investment in associates - - (36) - -

Loss on investment property revaluation 14 - - - (86) (89)

Reduction in liability to MET 355 299

(Decrease)/increase in market value of shares (152) - 28 - -

Share of associates’ net surplus 11 88 - 140 - -

Total other gains/(losses) (64) - 136 269 214

Net surplus/(deficit) before tax 4,136 2,549 4,608 5,256 4,448

Income tax expense 6 - - - -

Net surplus/(deficit) after tax 4,136 2,549 4,608 5,256 4,448

Net surplus/(deficit) attributable to:

Māori Trustee 4,136 2,549 4,608 5,256 4,448

Non-controlling interest - - - - -

Other comprehensive revenue and expense

Share of associates’ other comprehensive revenue/(expense)

11 (107) - 112 - -

Increase in financial assets at fair value 2,352 1,164 558 2,352 558

Gain on asset revaluation 523 - 437 254 226

Total comprehensive revenue and expense 6,904 3,713 5,715 7,862 5,232

Total comprehensive revenue and expense attributable to:

Māori Trustee 6,904 3,713 5,715 7,862 5,232


Explanations of major variances against budget are provided in note 27. These financial statements should be read in conjunction with the accompanying notes.


E.37

Statement of Changes in Net Assets/Equity For the year ended 31 March 2018

Group Parent

2018Actual

$000

2018Budget

$000

2017Actual

$000

2018Actual

$000

2017Actual

$000

Equity at beginning of year

General Purposes Fund 151,006 149,235 143,244 151,974 144,456

Appropriation Account 764 839 3,834 764 3,834

Financial assets through other comprehensive revenue and expense

2,253 2,253 1,667 2,038 1,480

Asset revaluation reserve 950 950 513 728 502

Total equity at beginning of year 154,973 153,277 149,258 155,504 150,272

Transfers from statement of comprehensive revenue and expense for the year


Appropriation Account (4,566) (6,106) (3,070) (4,566) (3,070)


2,352 1,164 586 2,352 558

Asset revaluation reserve 523 - 437 254 226

Total comprehensive revenue and expense 6,904 3,713 5,715 7,862 5,232

Equity at end of year


Appropriation Account (3,802) (5,267) 764 (3,802) 764


4,605 3,417 2,253 4,390 2,038

Asset revaluation reserve 1,473 950 950 982 728

Total equity at end of year 161,877 156,990 154,973 163,366 155,504



Statement of Financial Position As at 31 March 2018

Group Parent

Notes

2018Actual

$000

2018Budget

$000

2017Actual

$000

2018Actual

$000

2017Actual

$000

Assets

Current assets

Cash and cash equivalents 7 1,976 1,296 1,382 991 959

Debtors and other receivables 8 4,663 4,145 4,107 4,423 4,013

Term deposits 71,850 26,953 71,806 71,850 71,806

Held-to-maturity investments 9 5,869 4,500 5,358 5,869 5,358

Loans and receivables 10 315 178 236 315 236

Biological assets 12 1,282 1,125 1,033 - -

Equities 13 15,391 28,025 13,336 15,391 13,336

Investments in associates 11 - - 3,127 - 2,831

Inventory 146 - - - -

Total current assets 101,492 66,222 100,385 98,839 98,539

Non-current assets

Held-to-maturity investments 9 32,172 34,684 35,398 32,172 35,398

Loans and receivables 10 1,002 2,141 1,867 4,802 3,484

Investments 994 1,113 1,141 - -

Investments in subsidiaries - - - 4,479 3,438

Investments in associates 11 8,531 37,998 2,319 8,025 2,026

Other financial assets 1,515 341 341 1,515 341

Investment property 14 - 9,676 - 10,762 10,728

Property 15 10,762 10,728 - -

Plant and equipment 15 2,743 2,569 1,492 412 437

Intangible assets 16 5,169 4,935 4,111 4,581 3,748

Total non-current assets 62,888 93,457 57,397 66,748 59,600

Total assets 164,380 159,679 157,783 165,587 158,138

Liabilities and equity

Current liabilities

Payables 17 1,243 874 1,104 961 930

Employee benefits 18 763 669 844 763 844

Total current liabilities 2,006 1,543 1,948 1,724 1,774

Non-current liabilities

Employee benefits 18 16 10 24 16 24

Other non-current liabilities 19 481 1,136 837 481 837

Total non-current liabilities 497 1,146 861 497 861

Total liabilities 2,503 2,689 2,809 2,221 2,635

Net assets/equity

Total equity attributable to Māori Trustee 160,404 156,040 154,023 162,384 154,776

Reserves 1,473 950 950 982 728


Total equity 161,877 156,990 154,973 163,366 155,504

Total liabilities and equity 164,380 159,679 157,783 165,587 158,138



E.37

Statement of Cash FlowsFor the year ended 31 March 2018

Group Parent

Notes

2018Actual

$000

2018Budget

$000

2017Actual

$000

2018Actual

$000

2017Actual

$000

Cash flows from operating activities

Fees and commissions 5,662 5,791 4,843 5,703 4,864

Revenue from Crown 11,261 11,261 11,033 11,261 11,033

Investment revenue 4,039 3,006 4,485 4,038 4,486

Other revenue 813 1,654 186 799 319

Farm revenue 1,499 1,515 1,241 - -

Employee benefits (9,182) (9,905) (9,454) (9,182) (9,024)

Suppliers (7,127) (6,909) (5,928) (6,469) (5,736)

Farm and land expenses (1,503) (1,894) (745) - -

Restructure cost - - (35) - (35)

Goods and services tax (GST) (47) (900) 103 (57) 91

Net cash flows from operating activities 20 5,415 3,619 5,729 6,093 5,998

Cash flows from investing activities

Loans and receivables repaid 326 209 502 326 525

Held-to-maturity investments matured or sold 4,950 4,950 5,855 4,950 5,855

Term deposits matured/(invested) (44) 38,306 (2,514) (44) (2,514)

Investment in Common Fund Entities - - 708 - 708

Investment in funds and equities 365 (12,000) (6,000) 365 (6,000)

Disposal of property, plant and equipment 22 - - 22 -

Investment property purchased - - - (121) (16)

Biological assets (288) (83) (88) - -

Property, plant and equipment purchased (2,132) (867) (1,114) (181) (108)

Intangible assets purchased (1,312) (1,548) (869) (1,408) (511)

Loans and receivables advanced (121) (140) (231) (121) (2,093)

Investment in subsidiaries - - - (3,206) (80)

Investment in associates (6,000) (35,000) (121) (6,000) (121)

Held-to-maturity investments purchased (2,300) (2,500) (5,600) (2,300) (5,600)

Capital repayment from subsidiaries and associates 2,831 3,125 1,000 2,831 1,000

Other financial assets (1,118) - (66) (1,174) (66)

Sale of carbon units - 692 - 692

Net cash flows from investing activities (4,821) (5,548) (7,846) (6,061) (8,329)

Net increase/(decrease) in cash 594 (1,929) (2,117) 32 (2,331)

Cash at beginning of year 1,382 3,225 3,499 959 3,290

Cash at end of year 7 1,976 1,296 1,382 991 959

GST has been presented on a net basis. Investment and maturity of term deposits have also been reported on a net basis. Explanations of major variances against budget are provided in note 27.

These financial statements should be read in conjunction with the accompanying notes.


Statement of Trust MoniesFor the year ended 31 March 2018

The Māori Trustee operates trust accounts under section 23 of the Māori Trustee Amendment Act 2009 (the Act).

The transactions through these accounts and the balances at 31 March 2018 are not included in the Māori Trustee’s financial statements. Movements in these accounts were as follows:

Notes

Common FundSpecial

Investment Accounts

2018 $000

2017 $000

2018 $000

2017$000

Funds held in trust 106,750 104,253 215 169

Represented by

Cash 255 1,792 176 130

Bonds 47,995 50,711 39 39

Term deposits 58,500 51,750 - -

106,750 104,253 215 169

The Common Fund represents monies received by the Māori Trustee, under sections 23 and 25 of the Act, in trust for persons entitled to receive them. All Common Fund monies are guaranteed by the Crown under section 27 of the Act.

Special Investment Accounts are investments made in accordance with section 24 of the Act.


E.37

Notes to the Financial Statements For the year ended 31 March 2018

Statement of accounting policies

Reporting entity

The Māori Trustee is a corporation sole defined under the Māori Trustee Act 1953 (the Act) and is domiciled in New Zealand. The fundamental role of the Māori Trustee is to work with Māori landowners to protect and build their assets for now and for future generations. Accordingly, the Māori Trustee has designated itself as a public benefit entity (PBE) for financial reporting standards purposes.

These financial statements have been prepared in terms of section 23 of the Act for the General Purposes Fund and the Appropriation Account. The Māori Trustee operates and manages trust accounts on behalf of clients under section 23 of the Act. The trust account transactions and balances are not included in the Māori Trustee’s financial statements. These are included in the statement of trust monies. These consolidated financial statements for the year ended 31 March 2018 comprise the controlling entity and its controlled entities referred to as the ‘Group’.

The General Purposes Fund represents funds held by the Māori Trustee in its own right. The Appropriation Account was established on 1 July 2009 under the Māori Trustee Amendment Act 2009 to account for revenue received from the Crown.

The financial statements for the Māori Trustee are for the year ended 31 March 2018 and were approved by the Māori Trustee on 31 July 2018.

Basis of preparation

Statement of compliance

The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP).

In fulfilling its role in holding assets in a fiduciary capacity for Māori landowners as its primary business, the Māori Trustee is publicly accountable for the purposes of financial reporting.

The financial statements comply with PBE standards, and have been prepared in accordance with Tier 1 PBE standards.

Functional and presentation currency

The financial statements and notes are presented in the Māori Trustee’s functional currency, which is New Zealand dollars, and all values are rounded to the nearest thousand dollars ($000).

Standards issued and not yet effective and not early adopted

There are no standards, amendments and interpretations issued, but not yet effective, that have not been early adopted and that are relevant to the Māori Trustee.

Budget figures

The budget figures were approved by the Māori Trustee. The budget figures were prepared in accordance with NZ GAAP and are consistent with the accounting policies adopted by the Māori Trustee for the preparation of the financial statements.

Measurement base

The financial statements have been prepared on a historical cost basis, except where modified by revaluation of certain items of property, plant and equipment, investment property, held-to-maturity investments and non-current assets held for sale. The methods used to measure fair value are detailed in the specific accounting policies.

Basis of consolidation

Controlled entities

The consolidated financial statements comprise the financial statements of the Māori Trustee, its wholly owned and controlled entities, Te Tumu Mīere Limited (100%), MTD1 Limited (100%), Te Tumu Paeroa Dairy Limited Partnership (100%), Matakana 9 Limited Partnership (100%), M9 Limited (100%), Omaio 39 Limited Partnership (100%), O39 Limited (100%), TTP Manuka Limited


Partnership (100%) and TTP Services (Manuka) Limited (100%). Controlled entities are those entities over which the Māori Trustee has the power to govern the financial and operating policies to obtain benefits from their activities.

Te Tumu Mīere Limited is a wholly owned and controlled entity of the Māori Trustee. The nature of the business for Te Tumu Mīere Limited is that of collection and wholesaling of mānuka honey from Māori land blocks. Te Tumu Mīere Limited was incorporated in February 2015.

Te Tumu Paeroa Dairy Limited Partnership was originally created with the Māori Trustee as the only limited partner owning 100 partnership units. Subsequently, 50 of the 100 partnership units were transferred to the Māori Education Trust. During the 2016 financial year, the Māori Trustee bought back the 50 partnership units from the Māori Education Trust, leaving the Māori Trustee as the only limited partner.

MTD1 Limited is a wholly owned and controlled entity of the Māori Trustee with no transactions for the year ended 31 March 2018 (2017 Nil). MTD1 Limited is the general partner for Te Tumu Paeroa Dairy Limited Partnership, which was created in May 2013. As the general partner, MTD1 Limited has responsibility for the management and control of the business and partnership.

Matakana 9 Limited Partnership was created with the Māori Trustee as the only limited partner. The partnership is engaged in developing a kiwifruit orchard and producing kiwifruit in New Zealand.

M9 Limited is a wholly owned and controlled entity of the Māori Trustee with no transactions for the year ended 31 March 2018 (2017 Nil). M9 Limited is the general partner for Matakana 9 Limited Partnership, which was created in April 2016. As the general partner, M9 Limited has responsibility for the management and control of the business and partnership.

Omaio 39 Limited Partnership was created with the Māori Trustee as the only limited partner. The partnership is engaged in developing a kiwifruit orchard and producing kiwifruit in New Zealand.

O39 Limited is a wholly owned and controlled entity of the Māori Trustee with no transactions for the year ended 31 March 2018 (2017 Nil).

O39 Limited is the general partner for Omaio 39 Limited Partnership, which was created in April 2016. As the general partner, O39 Limited has responsibility for the management and control of the business and partnership.

TTP Manuka Limited Partnership was created with the Māori Trustee as the only limited partner. The partnership is engaged in developing a mānuka plantation in New Zealand.

TTP Services (Manuka) Limited is a wholly owned and controlled entity of the Māori Trustee with no transactions for the year ended 31 March 2018. TTP Services (Manuka) Limited is the general partner for TTP Manuka Limited Partnership, which was created in July 2017. As the general partner, TTP Services (Manuka) Limited has responsibility for the management and control of the business and partnership.

The financial statements of the wholly owned and controlled entities are prepared for the same reporting period as the Māori Trustee, with the exception of Te Tumu Paeroa Dairy Limited Partnership, which has a 31 May balance date to align with farming practice.

Intercompany transactions, balances and unrealised gains on transactions between the controlled entities and the Group are eliminated. Investments in controlled entities are subject to annual review for impairment.

Leases

Leases that do not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Operating lease payments are recognised on a straight-line basis over the term of the lease in the statement of comprehensive revenue and expense.

Term deposits

Investments in term deposits are initially measured at fair value plus transaction costs. For term deposits, impairment is established when there is objective evidence that the Māori Trustee will not be able to collect amounts due according to the original term of the deposit.

Investments

Investments are stated at market value.


E.37

Equities

Equities are measured at fair value of the investment through quoted prices in the market through other comprehensive revenue and expense that are initially measured at fair value plus transaction costs.

After initial recognition, these investments are measured at their fair value with gains and losses recognised in other comprehensive revenue and expense, except for impairment losses that are recognised in the surplus or deficit.

On derecognition, the cumulative gain or loss previously recognised in other comprehensive revenue and expense is reclassified from equity to surplus or deficit.

Other financial assets

Other financial assets are measured initially at cost because the Māori Trustee has little or no control over the investments. At the end of each reporting period, the Māori Trustee will assess if there’s any objective evidence of impairment for its investments.

Goods and services tax (GST)

All items in the financial statements are exclusive of GST, except for receivables and payables, which are presented on a GST-inclusive basis. Where GST isn’t recoverable as input tax, it’s recognised as part of the related asset or expense.

The net amount of GST receivable or payable to the Inland Revenue is included as part of receivables or payables in the statement of financial position.

The net GST paid to or received from the Inland Revenue, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows.

Commitments and contingencies are disclosed exclusive of GST.

Equity

Equity is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into the following components:

» General Purposes Fund – funds held by the Māori Trustee in its own right

» Appropriation Account – established under the Māori Trustee Amendment Act 2009 to account for revenue received from the Crown

» financial assets through other comprehensive revenue

» asset revaluation reserve(s).

Statement of cash flows

The statement of cash flows has been prepared using a direct approach subject to the netting of certain cash flows. The make-up of cash and cash equivalents in the statement of cash flows is the same as that for cash and cash equivalents in the statement of financial position.

Operating activities include cash received from all revenue sources and cash payments made for the supply of goods and services.

Investing activities include the acquisition and disposal of non-current assets and other investments not included in cash and cash equivalents.

Financing activities include activities that result in changes to the size and composition of equity.

Critical judgements, accounting estimates and assumptions

In preparing these financial statements in conformity with PBE accounting standards, the Māori Trustee has made judgements, estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

The estimates, judgements and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Critical accounting estimates and assumptions

The useful lives of assets have been based on historical experience. In addition, the condition of the assets is assessed annually and considered against the remaining useful lives. Adjustments to useful lives are made when considered necessary.


Critical judgements in applying accounting policies

The Māori Trustee has exercised the following critical judgement in applying the accounting policies.

» Impairment of financial and non-financial assets:

The Māori Trustee assesses the impairment of assets at each reporting date by evaluating conditions specific to the Māori Trustee and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.

» Revaluation of investment property:

The Māori Trustee assesses the fair value of its investment property at each reporting date by completing a property valuation, which evaluates market conditions at balance date.

Employee benefits:

The Māori Trustee makes assumptions in calculating employee benefits that are payable beyond 12 months of balance date, such as long service leave, which are calculated on an actuarial basis, taking into account years of service, years until entitlement, the likelihood that staff will reach the point of entitlement, and the net present value of the estimated cash flows.

» Revenue:

The Māori Trustee makes judgement when recognising and categorising revenue as revenue from exchange and non-exchange transactions.


E.37

1. Revenue from CrownThe Māori Trustee received revenue from the Crown in accordance with the Funding Agreement dated 24 March 2016 and variation to the funding agreement between the Minister for Māori Development and the Māori Trustee. The revenue in the current financial year is $11,261,000 (2017 $11,261,000).

Group Parent

2018$000

2017$000

2018$000

2017$000

Revenue from Crown 11,261 11,261 11,261 11,261

11,261 11,261 11,261 11,261

2. Revenue Accounting policy

The specific accounting policies for significant revenue items are explained below:

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that economic benefits will flow to the Māori Trustee and that the revenue can be reliably measured.

Revenue is comprised of:

» non-exchange transactions – revenue from Crown, fees and interest revenue from lending

» exchange transactions – commissions, common fund management fees, interest revenue from investment, dividends, rent, farm revenue, director’s fees and other revenue.

Fees and commissions

The Māori Trustee can only deduct commissions upon actual receipt of trust monies. Therefore, commissions are recognised on a cash basis and fees on an invoice basis.

Interest

Interest revenue is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated cash flows associated with a financial instrument over the expected life of the instrument.

Revenue from the Crown

Revenue from the Crown is recognised as revenue when the Māori Trustee is entitled to receive the funding.

Farm revenue

Farm revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that economic benefits will flow to the Partnership and that the revenue can be reliably measured.


Dividends

Dividends are recognised when the Māori Trustee’s right to receive payments is established.

Group Parent

2018$000

2017$000

2018$000

2017$000

Revenue from non-exchange transactions

Fees 3,364 3,075 3,425 3,095

Less fees forgiven/written off (441) (384) (441) (384)

Revenue from Crown 11,261 11,261 11,261 11,261

Interest revenue from lending 52 58 69 133

Total revenue from non-exchange transactions 14,236 14,010 14,314 14,105

Revenue from exchange transactions

Commissions 1,313 1,274 1,293 1,274

Common fund management fees 796 793 796 793

Interest revenue from investment 4,283 4,275 4,283 4,275

Farm revenue 1,356 1,207 - -

Dividends 9 16 110 16

Other revenue 571 524 771 735

Total revenue from exchange transactions 8,328 8,089 7,253 7,093

Total revenue 22,564 22,099 21,567 21,198

3. Employee benefits Accounting policy

Superannuation schemes

Obligations for contributions to KiwiSaver and the State Sector Retirement Savings Scheme are accounted for as defined contribution superannuation schemes and are expensed in the statement of comprehensive revenue and expense as incurred.

Group Parent

2018$000

2017$000

2018$000

2017$000

Salaries and wages 9,172 9,041 8,739 8,612

Defined contribution plan employer contributions 233 227 233 227

Increase/(decrease) in employee entitlements (77) 65 (77) 65

Recruitment related costs 198 241 198 241

Total employee benefits 9,526 9,574 9,093 9,145


E.37

4. Farm and land expensesGroup Parent

2018$000

2017$000

2018$000

2017$000

Administration expenses 92 99 - -

Aerial assessment - 4 - -

Feed 295 261 - -

Lease payments 17 7 - -

Repairs and maintenance 158 82 - -

Stock movement (137) (164) - -

Honey cost collection 64 - - -

Other farm expenses 561 441 - -

Total farm and land expenses 1,050 730 - -

5. Other expenditureGroup Parent

2018$000

2017$000

2018$000

2017$000

Fees paid to auditors

- Audit fees for Parent 156 154 156 154

- Audit fees for Subsidiary 36 25 - -

(Reduction)/Impairment of loans and receivables current year

(41) 282 (41) 282

(Reversal)/Impairment of debtors and other receivables (683) 683 (683) 683

Occupancy 797 788 797 788

Consultants’ fees 2,761 1,895 2,736 1,860

Legal fees 41 29 41 25

Travel 559 528 548 512

Telecommunications 216 227 216 227

Printing and stationery 116 126 116 126

Insurance 58 66 58 66

Software licences and maintenance 1,063 793 1,056 783

Loss/(gain) on disposal /write-off assets 10 2 10 2

Bad debts – loans and receivables written off 678 - 678 700

Other operating costs 1,200 1,038 1,193 1,029

Total other expenditure 6,967 6,636 6,881 7,237

6. Taxation Accounting policy

The Parent, the Māori Trustee, is exempt from income tax as a public authority. Accordingly, no provision has been made for income tax for the Parent. All controlled entities of the Parent are taxpayers. The accounting policies applied in respect of the controlled entities are as follows.

Income tax expense comprises both current and deferred tax. Income tax expense is charged or credited to the statement of comprehensive revenue and expense, except when it relates to items charged or credited directly to equity, in which case the tax is charged to equity.


Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at reporting date and any adjustments to tax in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the carrying amounts used for taxation purposes.

The amount of deferred tax provided is based on the expected manner of realisation of the asset or settlement of the liability, using tax rates enacted or substantively enacted at each reporting date. Deferred tax assets and liabilities are not discounted. A deferred tax asset is recognised in the financial statements for all deductible temporary differences and for the carry forward of unused tax losses and unused tax credits only to the extent that it is probable that future taxable surpluses will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Unrecognised deferred tax assets are reassessed at each balance sheet date.

Group

2018 $000

2017 $000

Reconciliation between tax expense and accounting surplus:

Surplus before tax 4,136 4,580

Tax at 28% (2017 28%) 1,158 1,282

Tax effect of:

Parent company income not taxable (1,472) (1,245)

Non-taxable income 314 (37)

Tax expense/(benefit) - -

Figures above are presented only for the Group as the Parent is exempt from tax. There is zero tax expense (2017 $Nil) and there is no offsetting movements (2017 $Nil).

7. Cash and cash equivalents Accounting policy

Cash and cash equivalents comprise cash on hand, cash at bank, and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Group Parent

2018$000

2017$000

2018$000

2017$000

Cash at bank and on hand 1,087 521 102 98

Deposits at call 889 861 889 861

Short-term deposits - - -

Total cash and cash equivalents 1,976 1,382 991 959

The carrying value of cash at bank, deposits at call and short-term deposits with maturities less than three months approximates their fair value.


E.37

8. Debtors and other receivablesAccounting policy

Debtors and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment.

A provision for impairment of debtors is established when there is objective evidence that the Māori Trustee will not be able to collect all amounts due according to the original terms of the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment.

The amount of the provision for impairment is the difference between an asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of a provision account, and the amount of the loss is recognised in the statement of comprehensive revenue and expense. When a debtor is uncollectable, it is written off against the provision account.

Group Parent

2018$000

2017$000

2018$000

2017$000

Receivables from non-exchange transactions

Trade debtors 228 231 228 228

Sundry receivables 2,815 2,815 2,815 2,815

Receivables from exchange transactions

Interest receivable 1,015 706 1,015 706

Sundry receivables 605 355 365 261

Total debtors and other receivables 4,663 4,107 4,423 4,013

The carrying value of debtors and other receivables approximates their fair value. Trade debtors are non-interest bearing and are generally on monthly terms. An impairment loss is recognised when there is objective evidence that an individual trade debtor is impaired. All debtors past due have been assessed for impairment.

9. Held-to-maturity investmentsAccounting policy

Non-derivative financial assets with fixed or determinable payments are classified as held-to-maturity investments when the Māori Trustee has the positive intention and ability to hold these investments to maturity. Held-to-maturity investments include bank bonds and corporate bonds. Investments intended to be held for an undefined period are not included in this classification.

Held-to-maturity investments are initially recorded at fair value plus transaction costs and are subsequently measured at amortised cost using the effective interest method less any impairment losses. The amortisation is recorded in the statement of comprehensive revenue and expense as interest revenue/expense. Gains and losses are recognised in the statement of comprehensive revenue and expense when the investments are derecognised or impaired.


Group Parent

2018$000

2017$000

2018$000

2017$000

Current portion

Bank bonds 3,633 131 3,633 131

Corporate bonds 2,236 5,227 2,236 5,227

Total current portion 5,869 5,358 5,869 5,358

Non-current portion

Bank bonds 11,527 15,055 11,527 15,055

Corporate bonds 20,645 20,343 20,645 20,343

Total non-current portion 32,172 35,398 32,172 35,398

Total held-to-maturity investments 38,041 40,756 38,041 40,756

10. Loans and receivablesAccounting policy

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. Loans and receivables include loans and mortgages, Conversion Fund loans and other advances.

Loans made at nil or below-market interest rates are initially recognised at the present value of their expected future cash flows, discounted at the current market rates of return for similar financial instruments. The loans are subsequently measured at amortised cost using the effective interest method. The difference between the face value and present value of the expected future cash flows of a loan is recognised in the net surplus or deficit as impairment.

These assets are initially recorded at fair value plus transaction costs and are subsequently measured at amortised cost using the effective interest method less provision for impairment.

A provision for impairment of loans and receivables is established when there is objective evidence that the Māori Trustee will not be able to collect all amounts due according to the original terms of the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment.

The amount of the provision for impairment is the difference between an asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of a provision account, and the amount of the loss is recognised in the statement of comprehensive revenue and expense. When an asset is uncollectable, it is written off against the provision account.

Loans and mortgages are classified as current assets if principal repayments are due within 12 months of balance date or if the principal amount is overdue at balance date. All other amounts are classified as non-current assets.


E.37

Group

Gross$000

2018Impairment

$000Net

$000Gross$000

2017Impairment

$000Net

$000

Current portion

Loans and mortgages 456 (216) 240 343 (232) 111

Conversion Fund loans 75 - 75 125 - 125

Total current portion 531 (216) 315 468 (232) 236

Non-current portion

Loans and mortgages 828 (61) 767 1,048 (66) 982

Conversion Fund loans 2,831 (2,599) 232 2,832 (1,958) 874

Other advances 18 (15) 3 26 (15) 11

Total non-current portion 3,677 (2,675) 1,002 3,906 (2,039) 1,867

Total loans and receivables 4,208 (2,891) 1,317 4,374 (2,271) 2,103

Parent

Gross$000

2018Impairment

$000Net

$000Gross$000

2017Impairment

$000Net

$000

Current portion

Loans and mortgages 456 (216) 240 343 (232) 111

Conversion Fund loans 75 - 75 125 - 125

Total current portion 531 (216) 315 468 (232) 236

Non-current portion

Loans and mortgages 4,628 (61) 4,567 2,665 (66) 2,599

Conversion Fund loans 2,831 (2,599) 232 2,832 (1,958) 874

Other advances 18 (15) 3 26 (15) 11

Total non-current portion 7,477 (2,675) 4,802 5,523 (2,039) 3,484


The carrying value of loans and receivables approximates their fair value. Movements in the provision for impairment of loans and receivables are as follows:

Group Parent

2018$000

2017$000

2018$000

2017$000

Provision for impairment at 1 April 2,271 1,993 2,271 1,993

Additional provisions made during the year 620 282 620 282

Receivables written off during the year - (4) - (4)

Provisions reversed during the year - - - -

Provision for impairment at 31 March 2,891 2,271 2,891 2,271

All loans and receivables have been reviewed at balance date and impaired where necessary to approximate their fair value.

Conversion Fund loans were established under the Māori Affairs Act 1953. The Māori Trustee is either applying funds from distributions to the repayment of such loans or converting loans to an interest-free loan with repayment terms.

The ageing profile of loans and receivables at year end is detailed below.


Group

Gross$000

2018Impairment

$000Net

$000Gross$000

2017Impairment

$000Net

$000

Not past due 1,086 (76) 1,010 1,201 (96) 1,105

Past due 1 – 30 days - - - 1 (1) -

Past due 31 – 60 days - - - - - -

Past due 61 – 90 days - - - - - -

Past due over 90 days 3,122 (2,815) 307 3,172 (2,174) 998


Parent

Gross$000

2018Impairment

$000Net

$000Gross$000

2017Impairment

$000Net

$000

Not past due 4,886 (76) 4,810 2,817 (96) 2,721

Past due 1 – 30 days - - - 1 (1) -

Past due 31 – 60 days - - - - - -

Past due 61 – 90 days - - - - - -

Past due over 90 days 3,122 (2,815) 307 3,173 (2,174) 999


Impairment in the ‘Not past due’ category includes the fair value impairment of loans that have an interest rate of 0%

11. Investments in associates Accounting policy

Associates are entities over which the Māori Trustee has significant influence and that are neither controlled entities nor joint ventures. Significant influence is where the Māori Trustee has over 20% of the voting rights. The Māori Trustee investments in associates include Rangihamama Dairy Limited Partnership, RDF1 Limited, Mānuka Research Partnership (NZ) Limited, Opotiki Packing and Coolstorage Limited, Huakiwi Developments Limited Partnership, Huakiwi Services Limited and Farm Data Accreditation Limited.

Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements. Under the equity method, investments in associates are carried at cost plus post- acquisition changes in the Māori Trustee’s share of the net assets of the associate, less provision for impairment.

The Māori Trustee’s share of post-acquisition surplus/(deficit) and other comprehensive revenue/(expense) is recognised in the statement of comprehensive revenue and expense. The cumulative post- acquisition movements are adjusted against the carrying amount of the investment.

Investments in associates are recorded at cost less any impairment losses in the Parent’s financial statements and are accounted for using the equity method of accounting in the Group financial statements.

The financial statements of associates are prepared for the same reporting period as the Māori Trustee, with the exception of: Rangihamama Dairy Limited Partnership and RDF1 Limited, which have a 31 May balance date to align with farming practice, and Opotiki Packing and Coolstorage Limited, which has a 31 December balance date. The financial statements of associates are prepared using consistent accounting policies.


E.37

Equity holding

Group Parent

2018 Actual

$000

2017 Actual

$000

2018 Actual

$000

2017 Actual

$000

RDF1 Limited (2018: 50%) - - - -

Rangihamama Dairy Limited Partnership (2018: 50%) 346 346 227 228

Putake Limited (2018: 0%) - 1,438 - 1,248

Putake Investments Limited Partnership (2018: 0%) - 1,689 - 1,583

Huakiwi Services Limited (2018: 50%) - - - -

Huakiwi Developments Limited Partnership (2018: 50%) 5,841 - 6,000 -

Mānuka Research Partnership (NZ) Limited (2018: 6.78%) - - - -

Opotiki Packing and Coolstorage Limited (2018: 10.1%) 2,344 1,973 1,798 1,798

Farm Data Accreditation Limited (2018: 14.29%) - - - -

Total investments in associates 8,531 5,446 8,025 4,857

Movements in the carrying amounts of investments in associates are as follows:

Group Parent

2018$000

2017$000

2018$000

2017$000

Investments in associates at beginning of year 5,446 6,109 4,857 5,736

Share of associates’ net surplus/(deficit) 88 140 - -

Share of associates’ other comprehensive revenue/(expenditure) (107) 112 - -

Share of associate dividends distributed (101) - - -

Capital repayment during the year (1,759) (500) (1,759) (500)

New investments during the year 6,000 121 6,000 121

Impairment of investments in associates - (36) - -

Disposal of investments during the year (240) (500) - (500)

Distribution of assets (796) - (1,129) -

Gain on wind up of investment - - 56 -

8,531 5,446 8,025 4,857

Summarised financial information of associates is as follows:

Group

2018 $000

2017 $000

Assets 60,919 50,423

Liabilities 25,339 23,057

Net assets 35,580 27,366

Revenue 48,724 45,056

Total comprehensive revenue/(expenditure) 4,683 2,029

Share of associates’ total comprehensive revenue

Net surplus/(deficit) after tax 88 140

Other comprehensive revenue/(expenditure) (107) 112

Total share of associates’ comprehensive revenue (19) 252


Putake Limited and Putake Investments Limited Partnership

Putake Investments Limited Partnership was a partnership between the Māori Trustee and Taupō Moana Investments Limited. The general partner was Putake Limited. Both entities have been wound up and deregistered. During the year, both entities made a capital distribution of $1,759,000 to the Māori Trustee and distributed the remainder of their investments namely, Ranginui Station 2008 Limited and Baker No Tillage. Ownership for the Māori Trustee’s portion has been transferred and recorded as other financial assets for the year ended 31 March 2018.

Rangihamama Dairy Limited Partnership and RDF1 Limited

Created in December 2013, Rangihamama Dairy Limited Partnership is a partnership between the Māori Trustee and the Omapere Taraire E & Rangihamama X3A Ahu Whenua Trust to run a joint venture dairy farm. The Omapere Taraire E & Rangihamama X3A Ahu Whenua Trust and the Māori Trustee have appointed RDF1 Limited as general partner to manage the partnership business. The company is 50% owned by Omapere Taraire E & Rangihamama X3A Ahu Whenua Trust and 50% by the Māori Trustee.

Huakiwi Developments Limited Partnership and Huakiwi Services Limited

Huakiwi Developments Limited Partnership was created in March 2017 between the Māori Trustee and Quayside Holdings Limited and is engaged in developing kiwifruit orchards and producing kiwifruit in New Zealand. The Māori Trustee and Quayside Holdings Limited have appointed Huakiwi Services Limited as general partner to manage the partnership business. The company is 50% owned by Quayside Holdings Limited and 50% by the Māori Trustee.

Mānuka Research Partnership (NZ) Limited

Mānuka Research Partnership (NZ) Limited is a company formed purely for research and development purposes to develop and trial superior mānuka plant cultivars alongside the Government through the Primary Growth Partnership (PGP) programme. The Māori Trustee has purchased a block of 120 shares at $1 per share equivalent of 6.78% (2016 9.94%) of the shares on issue. The Māori Trustee contributed $120,000 over four years to Mānuka Research Partnership (NZ) Limited to be used for PGP-related research.

Opotiki Packing and Coolstorage Limited

Opotiki Packing and Coolstorage Limited provides full orchard management, orchard services and post- harvest services to kiwifruit growers in eastern Bay of Plenty, Gisborne, Te Puke and Hawke’s Bay. The Māori Trustee purchased 10.1% shares in Opotiki Packing and Coolstorage Limited in December 2015.

Farm Data Accreditation Limited

Farm Data Accreditation Limited provides New Zealand Farm Data Standards, which is a set of common data vocabularies that help the business and industry organisations that serve New Zealand farmers to develop efficient technology applications and integrations. The Māori Trustee is a 14.29% shareholder in Farm Data Accreditation Limited.

12. Biological assets Accounting policy

Biological assets include livestock and kiwifruit bearer plants measured at fair value.

Livestock are measured at estimate of market value at reporting date. The estimated market return less selling cost is established by reference to current and expected sales returns when available, in the event market data is not available an assessment is made based on historical data

The method to determine the fair value of kiwifruit bearer plants depends on the degree of biological transformation (maturity of the fruit) at balance date.


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When insufficient biological transformation has occurred, the fair value is the costs incurred at balance date to grow the crops (so long as the costs are considered recoverable).

When sufficient biological transformation has occurred, fair value is the estimated best market return less selling cost to market.

Group Parent

2018$000

2017$000

2018$000

2017$000

Biological assets as at 1 April 1,033 962 - -

Increase due to purchases of hives and bees 201 - - -

Livestock losses (24) (36) - -

Reclassify kiwifruit bearer plants from property, plant and equipment

92 84 - -

Change in fair value due to biological transformation 241 240 - -

Change in fair value of livestock due to price changes (81) (76) - -

Increase/(decrease) due to sale (180) (141) - -

Biological assets as at 31 March 1,282 1,033 - -

PGG Wrightson Limited determines livestock market value by using sales that have taken place at the time of the valuation. Sales figures are based on similar types of stock that were being traded either through paddock sales or sold at auction.

Matakana 9 Limited Partnership holds kiwifruit bearer plants recorded at cost, in accordance with for profit accounting standard NZ IAS 16 Property, Plant and Equipment, because the bearer plants are exempt and excluded from the scope of accounting standard NZ IAS 41 Agriculture.

The Group applies PBE accounting standards for reporting and, hence, on consolidation, the kiwifruit bearer plants have been reclassified from property, plant and equipment to biological assets, in accordance with PBE IPSAS 27 Agriculture. Because there has been insufficient biological transformation of the kiwifruit bearer plants at balance date, and the fair value cannot be reliability measured, the Group has initially recognised the kiwifruit bearer plants at its cost less accumulated depreciation.

Te Tumu Miere Limited Partnership holds hives and bees and are recorded at level 3 on the fair value hierarchy, being calculations for which inputs are not based on observable market data (unobservable inputs). As the bee hives are continually regenerating the fair value assigned to a hive is on a $ per kg basis, plus queen and brood. The value attributed to these quantities has been sourced from the Ministry of Primary Industries.

13. Equities Accounting policy

Equities are measured at fair value of the investment through quoted prices in the market through other comprehensive revenue and expense which are initially measured at fair value plus transaction costs.

After initial recognition, these investments are measured at their fair value with gains and losses recognised in other comprehensive revenue and expense, except for impairment losses that are recognised in the surplus or deficit.

On derecognition, the cumulative gain or loss previously recognised in other comprehensive revenue and expense is reclassified from equity to surplus or deficit.


Risk management

The Group minimises credit risk by transacting all cash management, fixed interest investment and interest rate risk management activity with counterparties that are of high credit quality as determined by international credit rating agencies (e.g. Standard & Poor’s or Moody’s). This policy enables higher dollar value exposures to parties assessed by rating agencies as being most able to meet their obligations.

The Group holds equities of $15,391 million (2017 $13,336 million). These are comprised of portfolios of debt and equity investments managed by the Group’s investment manager. Together with the Group’s statement of investment policies and objectives, the Group ensures prudent management of a well-diversified portfolio of assets.

14. Investment property Accounting policy

Investment properties are properties that are held either to earn rental revenue or capital appreciation or both. Investment properties are measured initially at cost, including transaction costs. After initial recognition, investment properties are measured at fair value at balance date determined annually by an independent qualified valuer.

Any gain or loss arising from a change in the fair value of investment property shall be recognised in surplus or deficit for the period in which it arises.

Group Parent

2018$000

2017$000

2018$000

2017$000

Opening balance at 1 April - - 10,728 10,801

Additions at cost 120 16 120 16

Fair value adjustment (86) (89) (86) (89)

Transfer to property, plant and equipment (34) 73 - -

Closing balance at 31 March - - 10,762 10,728

The investment properties are dairy units located in the Ōtorohanga region. It’s the Māori Trustee’s policy that investment properties are valued at fair value based on an independent valuation. Fair value is based on market values, being the price that would be received for the sale of the property in an orderly transaction between market participants at the measurement date less expected costs incurred in selling the property. Movements in the valuation of investment property are reflected in the statement of comprehensive revenue and expense as a loss on investment property revaluation of $86,000 (2017 loss $89,000).

Since 2016, the Māori Trustee is the only limited partner in Te Tumu Paeroa Dairy Limited Partnership. As a result, investment property is transferred to property, plant and equipment in the Group accounts as the dairy units are considered owner occupied from the Group’s perspective.

Group Parent

2018$000

2017$000

2018$000

2017$000

Rental revenue from investment property - - 216 216

Direct operating expenses (including repair and maintenance) arising from investment property that generated rental revenue during the period - - - -

Total amount recognised in profit and loss (excluding revaluations) - - 216 216


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15. Property, plant and equipment Accounting Policy

Property, plant and equipment consists of land, IT equipment, office equipment, furniture and fittings and motor vehicles.

Land is measured at fair value at balance date determined annually by an independent qualified valuer.

Property, plant and equipment is measured at historical cost, less accumulated depreciation and impairments.

Depreciation is charged to the statement of comprehensive revenue and expense on all property, plant and equipment, other than work in progress. Depreciation is calculated on a straight-line basis at rates estimated to allocate the cost of an asset over the estimated useful life. The estimated useful lives and associated depreciation rates of the asset classes are as follows:

IT equipment - 3 years 33%

Office equipment - 5 years 20%

Furniture and fittings - 5 years 20%

Motor vehicles - 5 years 20%

Additions

The cost of an item of property, plant or equipment is recognised as an asset only when it is probable that future economic benefits or service potential associated with it will flow to the Māori Trustee and the cost of the item can be measured reliably. Work in progress is recognised at cost less impairment and it is not depreciated.

In most instances, an item of property, plant or equipment is initially recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at its fair value as at the date of acquisition.

Disposals

Property, plant and equipment assets are derecognised when disposed of or when no further future economic benefits are expected from use of the assets. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposal are included in the statement of comprehensive revenue and expense.

Revaluations

The carrying values of revalued assets are assessed annually to ensure that they do not differ materially from fair value. If there is evidence supporting a material difference, then the off-cycle asset classes are revalued.

The net revaluation results are credited or debited to other comprehensive revenue and expense and are accumulated to an asset revaluation reserve in equity for that class of asset. Where this would result in a debit balance in the asset revaluation reserve, this balance is not recognised in other comprehensive revenue and expense but is in the surplus or deficit. Any subsequent increase on revaluation that reverses a previous decrease in the value recognised in the surplus or deficit will be recognised first in the surplus or deficit up to the amount previously expensed, and then in other comprehensive revenue.

On subsequent sale of a revalued property, the attributed revaluation surplus remaining in the asset revaluation reserve is directly transferred to retained earnings.


Group 2018

IT e

quip

men

t

Offi

ce

equi

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Furn

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Mot

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vehi

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Bui

ldin

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Land

Farm

ass

ets

Tota

l

$000 $000 $000 $000 $000 $000 $000 $000

Cost at beginning of year 549 151 133 423 - 10,728 1,218 13,202

Additions 52 22 3 96 - - 1,562 1,735

Transfer from investment property - - - - - 34 - 34

Disposals (5) - (3) (67) - - - (75)

Bearer plants reclassified as biological assets

- - - - - - (103) (103)

Cost at end of year 596 173 133 452 - 10,762 2,677 14,793

Accumulated depreciation at beginning of year

378 126 96 216 - - 166 982

Depreciation 137 21 11 76 - - 136 381

Depreciation on disposals (2) - (3) (59) - - - (64)


- - - - - - (11) (11)

Accumulated depreciation at end of year 512 147 104 233 - - 292 1,288

Net carrying value at end of year 84 26 29 219 - 10,762 2,385 13,505

Group 2017

IT e

quip

men

t

Offi

ce

equi

pmen

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Furn

itur

e an

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ttin

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Mot

or

vehi

cles

Bui

ldin

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Land

Farm

ass

ets

Tota

l$000 $000 $000 $000 $000 $000 $000 $000

Cost at beginning of year 491 151 132 397 - 10,801 235 12,207

Additions 81 - 1 26 - - 1,077 1,185

Transfer from investment property - - - - - (73) - (73)

Disposals (23) - - - - - (6) (29)


- - - - - - (88) (88)

Cost at end of year 549 151 133 423 - 10,728 1,218 13,202


325 112 83 147 - - 88 755

Depreciation 73 14 13 69 - - 85 254

Depreciation on disposals (20) - - - - - (3) (23)


- - - - - - (4) (4)

Accumulated depreciation at end of year 378 126 96 216 - - 166 982

Net carrying value at end of year 171 25 37 207 - 10,728 1,052 12,220


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Parent 2018

IT e

quip

men

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Offi

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equi

pmen

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Furn

itur

e an

d fi

ttin

gs

Mot

or

vehi

cles

Bui

ldin

g

Land

Farm

ass

ets

Tota

l

$000 $000 $000 $000 $000 $000 $000 $000

Cost at beginning of year 544 151 132 423 - - - 1,250

Additions 52 22 3 96 - - 173

Disposals (5) - (3) (67) - - (75)

Cost at end of year 591 173 132 452 - - 1,348


375 126 96 216 - - - 813

Depreciation 79 21 11 76 - - 187

Depreciation on disposals (2) - (3) (59) - - (64)

Accumulated depreciation at end of year 452 147 104 233 - - 936

Net carrying value at end of year 139 26 28 219 - - 412

Parent 2017

IT e

quip

men

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Offi

ce

equi

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Furn

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d fi

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Mot

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vehi

cles

Bui

ldin

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Land

Farm

ass

ets

Tota

l

$000 $000 $000 $000 $000 $000 $000 $000

Cost at beginning of year 485 151 131 397 - - - 1,164

Additions 81 - 1 26 - - - 108

Disposals (22) - - - - - - (22)

Cost at end of year 544 151 132 423 - - - 1,250


324 112 83 147 - - - 686

Depreciation 71 14 13 69 - - - 167

Depreciation on disposals (20) - - - - - - (20)

Accumulated depreciation at end of year 375 126 96 216 - - - 813

Net carrying value at end of year 169 25 36 207 - - - 437

There are no restrictions over the title to items of property, plant and equipment, nor are any property, plant and equipment assets pledged as security for liabilities.

16. Intangible assets Accounting policy

Intangible assets consist of acquired computer software, software modified for use and carbon credits.

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs that are directly associated with the development of software for internal use are recognised as an intangible asset. Staff training costs are recognised as an expense when incurred. Costs associated with maintaining computer software are recognised as an expense when incurred.

Costs incurred with development and maintenance of the Māori Trustee’s website are recognised as an expense when incurred.


Acquired software and software modified for use are measured at historical cost less accumulated amortisation and impairments.

The estimated useful lives and associated amortisation rate of the asset class are as follows:

Acquired software 10 years 10%

Carbon credits (NZUs) Indefinite -

NZUs are initially measured at cost. Subsequently, at each reporting date, the NZUs are measured at fair value.

Any increase in the carrying amount is recognised in other comprehensive revenue and expense and accumulated in equity as revaluation reserve. The increase shall be recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit.

Any decrease is recognised in surplus or deficit. The decrease is recognised in other comprehensive revenue and expense to the extent of any credit balance in the revaluation reserve in respect of that asset.

Amortisation is charged to the statement of comprehensive revenue and expense on all intangible assets, other than work in progress. Amortisation is calculated on a straight-line basis at rates estimated to allocate the cost of an asset over the estimated useful life. The useful lives of the intangible assets have been assessed to be finite.

Impairment of non-financial assets

Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment is recognised in the statement of comprehensive revenue and expense for the amount by which the carrying amount exceeds the recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use for non-cash generating assets is determined as the depreciated replacement cost where the future economic benefits are not dependent on the assets ability to generate cash flows. Losses resulting from impairment are reported in the surplus or deficit.

Cash-generating assets and non-cash generating assets are distinguished by reviewing the assets’ primary objective. Cash-generating assets are those assets held with the primary objective of generating a commercial return and non-cash generating assets are those assets from which the Māori Trustee does not intend to realise a commercial return.

Group

2018 2017

Car

bon

cred

its

Oth

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inta

ngib

le

asse

ts

Tota

l

Car

bon

cred

its

Oth

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inta

ngib

le

asse

ts

Tota

l

$000 $000 $000 $000 $000 $000

Cost at beginning of year 1,168 4,463 5,631 1,201 3,602 4,803

Additions - 1,106 1,106 - 826 826

Disposals/Write off - (412) (412) (682) - (682)

Revaluation increase/(decrease) 254 - 254 649 - 649

Work in progress - 550 550 - 35 35

Cost at end of year 1,422 5,707 7,129 1,168 4,463 5,631

Accumulated amortisation at beginning of year - 1,520 1,520 - 1,122 1,122

Amortisation - 440 440 - 398 398

Accumulated amortisation at end of year - 1,960 1,960 - 1,520 1,520

Net carrying value at end of year 1,422 3,747 5,169 1,168 2,943 4,111


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Parent

2018 2017

Car

bon

cred

its

Oth

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inta

ngib

le

asse

ts

Tota

l

Car

bon

cred

its

Oth

er

inta

ngib

le

asse

ts

Tota

l

$000 $000 $000 $000 $000 $000

Cost at beginning of year 1,168 4,080 5,248 1,201 3,577 4,778

Additions - 858 858 - 468 468

Disposals/Write off - (412) (412) (682) - (682)

Revaluation increase/(decrease) 254 - 254 649 - 649

Work in progress - 550 550 - 35 35

Cost at end of year 1,422 5,077 6,499 1,168 4,080 5,248

Accumulated amortisation at beginning of year - 1,500 1,500 - 1,120 1,120

Amortisation - 418 418 - 380 380

Accumulated amortisation at end of year - 1,918 1,918 - 1,500 1,500

Net carrying value at end of year 1,422 3,159 4,581 1,168 2,580 3,748

There are no restrictions over the title to intangible assets nor are any intangible assets pledged as security for liabilities.

17. PayablesAccounting policy

Creditors and other payables represent liabilities for goods and services provided to the Māori Trustee prior to the end of the financial year.

Creditors and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

Group Parent

2018$000

2017$000

2018$000

2017$000

Payables under exchange transactions

Creditors 318 286 334 286

Accrued expenses 756 582 466 400

Revenue in advance (rent) - 25 - 25

Total payables under exchange transactions 1,074 893 800 711

Payables under non-exchange transactions

GST payable 169 211 161 219

Revenue in advance (Crown appropriation) - - - -

Total payables under non-exchange transactions 169 211 161 219

Total payables 1,243 1,104 961 930

As payables are non-interest bearing and are normally settled on monthly terms, their carrying value approximates their fair value.


18. Employee benefitsAccounting policy

Employee benefits include accrued salaries and wages, annual leave earned, and retiring and long service leave entitlements.

Employee benefits expected to be settled within 12 months of balance date are measured at the undiscounted current rates of pay and the accrued entitlements.

Employee benefits that are payable beyond 12 months of balance date, such as long service leave, are calculated on an actuarial basis, which takes into account years of service, years until entitlement, the likelihood that staff will reach the point of entitlement, and the net present value of the estimated cash flows.

Group Parent

2018$000

2017$000

2018$000

2017$000

Current portion

Accrued salaries and wages 258 287 258 287

Severance - - 0 -

Annual leave 414 490 414 490

ACC liabilities 74 57 74 57

Retirement and long service leave 17 10 17 10

Total current portion 763 844 763 844

Non-current portion

Retirement and long service leave 16 24 16 24

Total non-current portion 16 24 16 24

Total employee benefits 779 868 779 868

The present value of retirement and long service leave obligations are determined on an actuarial basis. These determining factors include: discount rate, salary inflation, years of service, years until entitlement, and the likelihood that staff will reach the point of entitlement. Any changes to these factors will affect the net present value of the estimated cash flows and the carrying amount of the liability.

Expected future payments are discounted using New Zealand government stock rates. A discount rate of 1.79% (2017 2.05%) and an inflation factor of 3.00% (2017 3.00%) were used based on historical salary inflation patterns

19. Liability to Māori Education TrustTe Tumu Paeroa Dairy Limited Partnership was originally created with the Māori Trustee as the only limited partner owning 100 partnership units. Subsequently, 50 of the 100 partnership units were transferred to the Māori Education Trust. During the 2016 financial year, the Māori Trustee bought back the 50 partnership units from Māori Education Trust, leaving the Māori Trustee as the only limited partner. Subsequently, a gain sharing arrangement was put in place between the Māori Trustee and Māori Education Trust which results in a non-current liability of $481,000 (2017 $837,000) that is payable to the Māori Education Trust when the farms in the partnership will be sold.


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20. Reconciliation of net operating surplus with net cash flows from operating activities

Group Parent

Notes2018$000

2017$000

2018$000

2017$000

Net surplus 4,136 4,580 5,256 4,448

Add/(deduct) non-cash items

Amortisation of premiums/discount 65 109 65 109

Depreciation 15 381 254 187 167

Amortisation of intangible assets 16 440 398 418 380

Impairment losses/(gains) 632 961 632 1,661

Share of associates’ net deficit/(surplus) 11 (88) (140) - -

Loss on investment property revaluation - - 86 89

Reduction in liability to MET (355) (299)

Impairment of investments in associates - 36 - -

Disposal of investments in associates 232 - - -

EMOO costs expensed 411 - 411 -

Interest income on loans and advances (48) (48)

Add/(deduct) investing activities

(Gain)/loss on disposal of property, plant and equipment (4) 2 (4) 2

Gain on sale of carbon units/shares (68) (433) (68) (433)

Bearer plants reclassified as biological assets - 84 - -

Add/(deduct) movements in working capital

(Increase)/decrease in debtors and other receivables (577) (189) (430) (192)

(Increase)/decrease in stock (146) (71) - -

Increase/(decrease) in payables 49 138 (57) 66

Net cash flows from operating activities 5,415 5,729 6,093 5,998

21. Commitments Accounting policy

Commitments are future expenses and liabilities to be incurred on contracts entered into before balance date.

Cancellable commitments that have penalty or exit costs explicit in the agreement are reported at the minimum future payments, including the value of the penalty or exit cost. Commitments include:

» non-cancellable operating leases for property, which are measured as the future payments due under the lease contract

» other non-cancellable commitments for consulting contracts, which are measured as the future payments due under the contracts.


Group Parent

2018$000

2017$000

2018$000

2017$000

Lease commitments as lessee

Less than 1 year 608 599 601 592

1 year to 2 years 526 558 519 551

2 years to 5 years 1,347 1,377 1,326 1,356

Greater than 5 years 63 368 - 305

Total lease commitments as lessee 2,544 2,902 2,446 2,804

The Māori Trustee leases its head office and regional office premises. A significant portion of the non-cancellable operating lease expense relates to the lease of the Wellington head office, which has a November 2022 right of renewal and a termination date of 30 November 2028. The Māori Trustee does not have the option to purchase assets pursuant to any of the leases.

Group Parent

2018$000

2017$000

2018$000

2017$000

Lease commitments as lessor

Less than 1 year 136 41 352 257

1 year to 2 years 335 41 371 77

2 years to 5 years 64 27 64 27

Greater than 5 years - - - -

Total lease commitments as lessor 535 109 787 361

The Māori Trustee sub-leases a portion of its head office premises to other parties. Also, approximately 99% (2017 70%) of the commitment as lessor in the Parent figures relates to investment property.

22. Contingent liabilities and assets

Accounting policy

Contingent assets and contingent liabilities are disclosed at the point at which the contingency is evident.

Contingent assets are disclosed if it is probable that the benefits will be realised. Contingent liabilities are disclosed if the possibility that they will crystallise is not remote.

Unclaimed monies (1963 to 1993)

A contingent liability of $7,644,000 (2017 $7,644,000) relates to beneficiary monies paid out by the Māori Trustee under section 30(9) of the Māori Trustee Act 1953 to the Māori Education Trust, the Māori Purposes Fund Board and the New Zealand Māori Council. This section was later substituted by section 2(1) of the Māori Trustee Amendment Act 1996, which became effective on 24 June 1996. The Māori Trustee will be liable to make payment to beneficiaries who establish an entitlement in the future.

Compensation leases

The Māori Trustee administers leases where compensation is payable to the lessee on expiry or resumption of a lease.

In some of these cases, the Māori Trustee is required by the Māori Vested Land Administration Act 1954 to advance to owners monies required to meet compensation payments, where sums set aside during the course of the lease prove to be insufficient. Advances that the Māori Trustee may be required to make upon resumption of such leases are not quantifiable at this time.


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In other cases where the lease provides for compensation to be paid to the lessee, and there are insufficient funds held on behalf of the owners, the Māori Trustee is not required by statute to provide these funds. However, the Māori Trustee may be called upon to provide a loan from the General Purposes Fund to assist owners to meet the obligations to lessees to pay for improvements. The value of such advances is not quantifiable at this time.

Land Overlay 3A

A number of Māori land trusts administered by the Māori Trustee as Responsible Trustee have received notification from the Gisborne District Council that parts of their land are subject to serious land erosion and have been classified as “Land Overlay 3A” under the Council’s Combined Regional Land and District Plan. Under the Combined Regional Land and District Plan, a works plan must be developed for land classified as Land Overlay 3A, which provides, amongst other things, for the establishment of effective tree cover for the affected land by 2021.

As Land Overlay 3A obligations ultimately rest with the legal landowner, the Māori Trustee could in the future be required to cover compliance costs associated with the Land Overlay 3A requirements, which are unable to be met by the affected trusts.

The potential costs (if any) are unable to be quantified at this time. Factors that would affect quantification include the outcome of the discussions with the Gisborne District Council and other agencies, whether affected trusts are eligible to meet some of the compliance costs from the Erosion Control Funding Programme (East Coast) grant (and, if so, the amount of the grant), and the financial ability of individual trusts to meet compliance costs when called upon to do so.

Pre-1990 forest

Several of Māori land trusts administered by the Māori Trustee as Responsible Trustee or as Custodian Trustee own “pre-1990 forest” (as defined under the Climate Change Response Act 2002). The Māori Trustee has the obligations of the legal landowner of ”pre-1990 forest” under the Act, associated legislation and rules.

If “deforestation” (as defined under the Act) of any pre-1990 forest were to occur, the trusts concerned would need to meet the deforestation liability by the surrender of NZUs or Kyoto-compliant emissions units (except where the Environmental Protection Authority has determined that responsibility for the deforestation lies with a third party, e.g. the holder of a forest right or lessee). If a land trust that the Māori Trustee administers as Responsible Trustee or Custodian Trustee did not have sufficient emissions units to meet a deforestation liability and did not have, or could not obtain, third party finance to acquire sufficient emissions units to meet the deforestation liability, the Māori Trustee as legal landowner would need to ensure that the affected trust acquired emissions units to meet the deforestation liability.

The potential costs (if any) are unable to be quantified at this time. Factors that would affect quantification in the event of deforestation include the number of hectares subject to deforestation (and accordingly the number of emissions units that need to be surrendered), whether the emissions units held by an affected trust are sufficient to meet the deforestation liability and, if not, the cost to acquire additional emissions units at the time.

Other contingent liabilities

The Māori Trustee is not aware of any potential claims (2017 $388,000). There have been no additional claims during the year (2017 Nil).


23. Financial instruments Accounting policy

The Māori Trustee is party to financial instruments as part of its normal operations. Financial instruments include:

» financial assets – cash and cash equivalents, debtors and other receivables, term deposits, held-to-maturity investments, loans and receivables, equities and non-current assets held for sale

» financial liabilities – creditors and other payables, revenue in advance and employee benefits.

Purchases and sales of financial assets are recognised on the date when the Māori Trustee becomes party to a financial contract. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or been transferred.

Financial instruments are initially recognised at fair value plus transaction costs. Subsequent measurement of financial instruments depends on the classification of the financial instrument. The carrying amounts of each category of financial assets and financial liabilities are as follows:

Group Parent

Notes2018$000

2017$000

2018$000

2017$000

Financial assets

Cash and cash equivalents 7 1,976 1,382 991 959

Debtors and other receivables 8 4,663 4,107 4,423 4,013

Term deposits 71,850 71,806 71,850 71,806

Held-to-maturity investments 9 38,041 40,756 38,041 40,756

Loans and receivables 10 1,317 2,103 5,117 3,720

Equities 15,391 13,336 15,391 13,336

Total financial assets 133,238 133,490 135,813 134,590

Financial liabilities

Payables 17 1,243 1,104 961 930

Employee benefits 18 779 868 779 868

Other non-current liabilities 19 481 837 481 837

Total financial liabilities 2,503 2,809 2,221 2,635

Fair value hierarchy

For those instruments recognised at fair value in the statement of financial position, fair values are determined according to the following hierarchy:

» Financial assets – cash and cash equivalents, debtors and other receivables, term deposits, held-to-maturity investments, loans and receivables, equities and non-current assets held for sale.

» Quoted market price (level 1) – Financial instruments with quoted prices for identical instruments in active markets.

» Valuation technique using observable inputs (level 2) – Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable.

» Valuation techniques with significant non-observable inputs (level 3) – Financial instruments valued using models where one or more significant inputs are not observable.

There were no transfers between the different levels of the fair value hierarchy.


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Fair value

The fair value of all loans and receivables is equivalent to the carrying amount disclosed in the Māori Trustee’s statement of financial position.

The held-to-maturity investments had a fair value of $38,041,000 as at 31 March 2018 (2017 $41,562,000). The fair value is determined using quoted market prices (level 1).

Equities are measured at fair value of the investment through quoted prices in the market (level 1) through other comprehensive revenue and expense.

Financial instruments risk

The Māori Trustee’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Māori Trustee has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instrument risks.

Market risk

Price risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Māori Trustee’s equity investments are exposed to price risk because they are listed investments. The equity investments are publicly traded.

Sensitivity analysis

If the price at 31 March 2018 had fluctuated by plus or minus 0.5%, the effect would have been to increase/decrease other comprehensive revenue and expense by:

Group Parent

2018$000

2017$000

2018$000

2017$000

0.5% increase/(decrease) in price would increase/(decrease) the other comprehensive revenue and expense

82 72 77 67

Commodity analysis

Te Tumu Paeroa Dairy Limited Partnership is exposed to commodity price risk as a result of its agreement with Fonterra to supply milk products. In the 2018 year Te Tumu Paeroa Dairy Limited Partnership supplied Fonterra with 204,045 kg of milk with an average price of $6.70. A 0.5% increase/(decrease) in the price of milk would increase/(decrease) the other comprehensive revenue and expense by $6,836.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in interest rates. The Māori Trustee is exposed to interest rate risk on those financial instruments that have fluctuating interest rates.


The investments that have floating or variable interest rates are as follows:

Group Parent

2018$000

2017$000

2018$000

2017$000

Cash and cash equivalents sensitivity analysis

Weighted average effective interest rate % 1.44 0.85 1.50 0.60

1% increase/(decrease) in interest rates would increase/(decrease) interest revenue and equity

$000 13 13 13 10

Held-to-maturity investments sensitivity analysis

Weighted average effective interest rate % 3.17 2.56 3.17 2.56

1% increase/(decrease) in interest rates would increase/(decrease) interest revenue and equity

$000 5 30 5 30

Credit risk

Credit risk is the risk that a third party will default on its obligation to the Māori Trustee, causing a loss to be incurred. Credit risk arises from the financial assets of the Māori Trustee, which comprise cash and cash equivalents, term deposits, debtors and other receivables, loans and receivables and held-to-maturity investments.

Cash, cash equivalents and term deposits

Cash, cash equivalents and term deposits are invested with registered banks.

Debtors and other receivables

There are no material concentrations of credit risk with respect to debtors and other receivables.

Held-to-maturity investments

The Māori Trustee maintains a diversified investment portfolio of bonds in order to minimise credit risk. The General Purposes Fund investment parameters are:

» the minimum rating of the portfolio will be at least BBB rated or better unless approved by the Investment and Credit Committee and the Māori Trustee

» for corporate issuers, no single issuer shall exceed 10% of the fixed revenue portfolio

» for bank issuers, no single issue shall exceed 25% of the fixed revenue portfolio.

Loans and receivables

The Māori Trustee has issued mortgages under section 32 of the Māori Trustee Act 1953 and section 248 of the Māori Affairs Act 1953, Conversion Fund loans and other advances.

Advances under section 32 of the Māori Trustee Act 1953 may or may not be secured.

Advances under section 248 of the Māori Affairs Act 1953 may or may not be secured. Where security is taken, the security is a memorial of charge over land.

The Conversion Fund was abolished by the Māori Affairs Amendment Act 1987, which effectively vested the Conversion Fund assets in the Māori Trustee. Conversion Fund loans are ‘presumed advances’ and are not secured, but the Māori Trustee owns shares in the land to which the Conversion Fund loans relate. The Māori Trustee has made impairment provisions for loans.

The following table analyses the credit quality of financial assets that are neither past due nor impaired, with reference to Standard and Poor’s or equivalent credit ratings (if available) or to historical information about counterparty default rates.


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Group Parent

2018$000

2017$000

2018$000

2017$000

Cash and cash equivalents and term deposits

AA- 61,841 48,765 61,842 48,765

A+ 11,985 24,423 11,000 24,000

Total cash and cash equivalents and term deposits 73,826 73,188 72,842 72,765

Held-to-maturity investments

AAA to A 17,687 20,266 17,687 20,266

A- to BBB 20,354 20,490 20,354 20,490

Total held-to-maturity investments 38,041 40,756 38,041 40,756

Other than credit risks listed above, the Māori Trustee does not hold any collateral or other credit enhancements for financial instruments that give rise to credit risk.

Liquidity risk

Liquidity risk is the risk that the Māori Trustee will not have sufficient funds to meet commitments as they fall due.

Cash and cash equivalents and term deposits

The Māori Trustee monitors forecast cash requirements daily. Surplus funds are invested for terms appropriate for the expected cash requirements. A minimum buffer is maintained, which provides access to funds in excess of the forecast cash requirements.

The table below analyses the Māori Trustee’s financial liabilities into maturity groupings based on the remaining period from end of year to the contractual maturity date.

Financial liabilities

Group Parent

2018$000

2017$000

2018$000

2017$000

Less than 6 months 1,243 1,104 961 930

6 – 12 months 763 844 763 844

Later than 12 months 497 861 497 861

Total financial liabilities 2,503 2,809 2,221 2,635

24. Capital managementThe Māori Trustee’s capital is its equity, which is comprised of accumulated funds. Equity is represented by net assets. The Māori Trustee is subject to the financial management and accountability provisions of the Māori Trustee Act 1953.

The Māori Trustee manages its equity as a by-product of prudently managing revenues, expenses, assets and liabilities, investments and general financial dealings, to ensure that the Māori Trustee effectively achieves its strategies and remains a going concern.


25. Related partiesRelated party disclosures have not been made for transactions with related parties that are within a normal supplier or client relationship on terms and conditions no more or less favourable than those that it is reasonable to expect the Māori Trustee would have adopted in dealing with the party at arm’s length in the same circumstances.

The Māori Trustee transacts with the related parties below.

Related entities Nature of relationship

Te Tumu Mīere Limited Wholly owned entity

MTD 1 Limited Wholly owned entity

Te Tumu Paeroa Dairy Limited Partnership Wholly owned entity

M9 Limited Wholly owned entity

Matakana 9 Limited Partnership Wholly owned entity

O39 Limited Wholly owned entity

Omaio 39 Limited Partnership Wholly owned entity

TTP Manuka Limited Partnership Wholly owned entity

TTP Services (Manuka) Limited Wholly owned entity

Rangihamama Dairy Limited Partnership Investment in associate

RDF1 Limited Investment in associate

Huakiwi Developments Limited Partnership Investment in associate

Huakiwi Services Limited Investment in associate

Mānuka Research Partnership (NZ) Limited Investment in associate

Opotiki Packing and Coolstorage Limited Investment in associate

Farm Data Accreditation Limited Investment in associate

Crown Appropriation funding

The following transactions were entered into with related parties during the year:

Te Tumu Mīere Limited

Te Tumu Mīere Limited (TTM) is a wholly owned subsidiary of the Māori Trustee. During the year the Māori Trustee advanced $555,000 (2017: $298,000) to TTM. The Māori Trustee charged interest of $17,760 (2017 $23,000) at the rate of 3.2% per annum. TTM did not repay any interest this year (2017 $23,000).

During the year, the Māori Trustee has made a capital contribution of $1,041,000 (2017 $Nil).

In 2017, the Māori Trustee fully impaired advances of $700,000 made to TTM including interest. The Māori Trustee also approved forgiveness of $127,000 advance to TTM and converted $573,000 advance to equity in the financial statements for TTM.

Intercompany transactions and balances have been eliminated in the Group financial statements.

Te Tumu Paeroa Dairy Limited Partnership

The Māori Trustee holds a 100% interest in the partnership. During the year, the Māori Trustee charged $216,000 rent for investment properties (2017 $216,000) and while no additional capital contribution was made (2017 $80,000), a cash contribution was paid to the Māori Trustee for $250,000 (2017 nil).

During the year, the Māori Trustee reimbursed $20,000 (2017 $16,000) to the partnership for development expenditure incurred on the farms. Intercompany transactions and balances have been eliminated in the Group financial statements.


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Matakana 9 Limited Partnership

The Māori Trustee holds a 100% interest in the partnership. During the year, the Māori Trustee advanced $287,900 (2017 $1,617,000) to the partnership to cover initial setup costs and working capital requirements.


Omaio 39 Limited Partnership

The Māori Trustee holds a 100% interest in the partnership. During the year, the Māori Trustee advanced $1,175,000 (2017 $Nil) to the partnership to cover initial setup costs and working capital requirements.


TTP Manuka Limited Partnership

The Māori Trustee holds a 100% interest in the partnership. During the year, the Māori Trustee advanced $147,200 (2017 $Nil) to the partnership to cover initial setup costs and working capital requirements.


Rangihamama Dairy Limited Partnership

The Māori Trustee has a 50% interest in the partnership. The Māori Trustee did not make any capital contribution during the year (2017 $121,000).

Huakiwi Developments Limited Partnership

The Māori Trustee has a 50% interest in the partnership. During the year, the Māori Trustee advanced $6,000,000 (2017 $Nil) to the partnership to cover initial setup costs and working capital requirements.

Manuka Research Partnership (NZ) Limited

The Māori Trustee has a 6.78% (2017 6.78%) interest in the partnership. During the year, the Māori Trustee did not make any contributions (2017 $30,000) to the partnership.

Opotiki Packing and Coolstorage Limited

The Māori Trustee has a 10.1% interest in the company. During the year, the Māori Trustee received $34,000 in directors fees (2017 $50,000) and paid no further funds as capital contribution (2017 $Nil).

Crown

The Crown is the major source of revenue for the Māori Trustee.

Appropriation revenue from the Crown of $11,261,000 (2017 $11,261,000) is provided pursuant to a funding agreement dated 24 March 2016 and variation to funding agreement between the Māori Trustee and the Minister for Māori Development for a four-year term until 31 March 2020.

The funding provided by the Crown enables the Māori Trustee to fulfil statutory and other common law obligations. The statement of service performance reports against the outputs detailed in the funding agreement. Payment for these services is managed by Te Puni Kōkiri on behalf of the Crown.


Statutory role

The core function of the Māori Trustee is to hold land as Trustee or administer land as agent for Māori landowners. The Māori Trustee also administers other entities under statute, for example, the Māori Soldiers Trust, which owns and operates Hereheretau Station.

The Māori Trustee charges fees and commissions for managing trusts, agencies and properties, providing accounting and tax services and taking instructions for special investments. For the year ended 31 March 2018, the Māori Trustee earned $4,718,000 in fees and commissions (2017 $4,370,000).

The Māori Trustee is able to lend monies under the Māori Trustee Act 1953. Loans made to trusts, agencies and landowners are generally at market interest rates. Loans advanced to replace Conversion Fund loans are non-interest bearing (Note 10).

Key management personnel compensation

Group Parent

2018$000

2017$000

2018$000

2017$000

Senior Management Team

Remuneration 1,042 1,254 1,042 1,254

Full-time equivalent members 4.10 5.33 4.10 5.33

Total key management personnel remuneration 1,042 1,254 1,042 1,254

Total full-time equivalent members 4.10 5.33 4.10 5.33

Key management personnel comprise the Māori Trustee, Deputy Māori Trustee (terminated in May 2017), Chief Operating Officer, Chief Financial Officer and General Manager Trusts.

Parent

2018$000

2017$000

$100,000 – $109,999 13 12

$110,000 – $119,999 3 3

$120,000 – $129,999 5 3

$130,000 – $139,999 3 4

$140,000 – $149,999 1 -

$150,000 – $159,999 1 2

$160,000 – $169,999 - -

$170,000 – $179,999 1 2

$180,000 – $189,999 - 1

$190,000 – $199,999 - 1

$200,000 – $209,000 - 1

$210,000 – $219,999 1 -

$220,000 – $229,999 1 2

$230,000 – $239,999 2 -

$240,000 – $249,999 - -

$250,000 – $259,999 - -

$260,000 – $269,999* 1 1

32 32


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During the year ended 31 March 2018, two employees (2017 one employee) received compensation and other benefits of $14,000 in relation to cessation (2017 $35,000).

*Remuneration in this band was paid to the Māori Trustee.

26. Events after the balance dateThere are no significant events after the balance date.

27. Explanation of significant variances against budget Statement of comprehensive revenue and expenses

Revenue

Interest revenue was higher than the budget because more funds were invested as term deposits rather than in equities and bonds as budgeted. This has resulted in a significant positive variance to budget, which was offset against a negative variance to budget for dividend income expected to be earned from investment in equities.

Other revenue was $842,000 lower than the budget mainly due to not earning our share of rent income from the Port Nicholson Block Settlement Trust as expected.

Expenditure

Employee benefits were $577,000 less than the budget. This was mainly due to not recruiting all the staff budgeted for.

Farm and land expenses were below budget, as Te Tumu Paeroa Dairy Limited Partnership and Te Tumu Miere costs were budgeted as a single line, whereas the actual costs were consolidated at an account level.

Other expenditure was $391,000 below budget for the year. Key areas for the underspend were travel, recruitment, training and software licences and maintenance in addition to the reversal of doubtful debts ($683,000) that further lowered other expenditure.

Other gains/(losses) and other comprehensive revenue and expenses

Share of associates’ net surplus/(deficit), other comprehensive revenue/(expense) and gain on asset revaluation were higher than budget because these movements were not budgeted for.

Financial assets at fair value were higher than budget by $1,188,000 because the market growth of equities we had invested in was much higher than budgeted.

Statement of financial position

Assets

Held-to-maturity investments was less than the budget due to fewer bonds being purchased than budgeted during the year.

Investment in funds and equities was under budget because the budget assumption was to invest $12,000,000 in equities, which has not happened.

Investment in associates was less than budget by $29,467,000. This was due to the budget assumption to invest $20,000,000 in Port Nicholson Block Settlement Trust for which the legal structure is to be finalised in the next financial year; and $15,000,000 in Huakiwi Developments Limited Partnership of


which only $6,000,000 has been spent. This has been offset by the capital repayment received in March 2018 from Putake Limited and Putake Investments Limited Partnership for $1,759,184 and part in transfer of ownership for investments held earlier under the partnership for $1,305,194.

Investment property was higher than budget because of the expected opening position determined at the time of budgeting.

Plant and equipment were higher than the budget due to the consolidation of Omaio 39 Limited Partnership and TTP Manuka Limited Partnership as subsidiaries.

Liabilities

Other non-current liabilities was below budget by $655,000 because the budget assumed the liability would remain static in line with the value of the investment property.

Statement of cash flows

Net cash flows from investing activities varied from budget by $727,000 mainly due to underspent in investment in associates and equities offset by held-to-maturity investments.

Te Tumu Paeroa

Level 3, Seabridge House 110 Featherston Street

PO Box 5038 Wellington 6145

Aotearoa New Zealand

0800 WHENUA (0800 943 682) tetumupaeroa.co.nz

facebook.com/TeTumuPaeroa

Documents

Māori Trustee Annual Report · Statement of Trust Monies 60 Notes to the Financial Statements 61. E.37 MĀORI TRUSTEE. ANNUAL REPORT 2018 1. ... details are held ... This is an important